SUSTAINABILITY REPORT 2015 - DZ HYP

SUSTAINABILITY REPORT 2015

About This ReportIn this report, we relate the central activities dedicated to sustainability that we engaged in during 2015. We outline the economic, ecological and social implications of our business, disclosing the measures we have taken and the progress we have made.

Report Scope and Boundary nQualitative and quantitative statements and data were collected separately for each DG HYP department and then com-bined in a central database. Responsibility for its analysis lies with the Sales Management and Investor Relations depart-ment. No material changes were registered during the period under review. GRI G4-23

All metrics refer to DG HYP's Headquarter in Hamburg, unless otherwise stated, and were updated as at 31 December 2015. Results of particular relevance, however, were included up to the editorial deadline on 31 March 2016. This report was not verified externally, with the exception of material contents and indicators. All economic figures were taken from DG HYP’s audited Annual Report. The calculation of greenhouse gas emissions was based on the VfU indicator system (Association for Environmental Management and Sustainability in Financial Institutions), that is based on the Greenhouse Gas Protocol (GHG Protocol). GRI CriteriaThe Sustainability Report follows the G4 guidelines promulgated by the Global Reporting Initiative (GRI). For an overview of the GRI indicators and the relevant passage, please see the GRI Content Index. The GRI indicators GRI G4-17 to G4-27 are shown directly in the text at the end of the respective paragraph.

To better understand which topics matter most to our stakeholders, we engaged in a materiality analysis throughout DZ BANK Group. As a result, we revisited the structure and thematic priorities of this Sustainability Report, creating a separate chapter on the banking business and the relevant sector-specific sustainability requirements. GRI G4-18, G4-22

We also reviewed our sustainability programme to ensure more transparency on target corridors and the implementation status of our measures. GRI G4-22

Global Compact This report meets the requirements of UN Global Compact for a Communication on Progress report. The corresponding references on the implementation of the ten principles have been integrated into the GRI Content Index. Our parent com-pany, DZ BANK, publishes a dedicated Communication on Progress report.

DZ BANK AG’s Communication on Progress for UN Global Compact can be found here 3 http://dghyp.de/UNGC

Additional Information This Sustainability Report is available for download in German or English on our website (www.dghyp.de). For current trends on sustainability, please also refer to our website. Comprehensive information on the economic performance and business model of DG HYP can be found in the 2015 Annual Report, which is also available for download as PDF at www.dghyp.de.

Disclaimer We took great care in the elicitation of data for this report, but we cannot rule out any mistakes. Forward-looking state-ments are based on the information and forecasts available at the time of publication. There are many factors, some of which were unforeseeable at the time of publication, that may cause actual results to differ.

DG HYP’s next Sustainability Report is scheduled to be published in 2017.

3DG HYP | Sustainability Report 2015

About This Report 2

Letter from the Management Board 4

Our Company About DG HYP 7

Values and Principles 9

Member of the UN Global Compact 10

Our Business Model 10

Business Development 12

Sustainability Strategy Our Approach to Sustainability 15

Sustainability Management 15

Stakeholder Dialogue 16

Stakeholder Focus and Materiality 19

Responsible Corporate Governance 20

Sustainable Banking Our Core Business 25

Local Authority Lending 28

Client Satisfaction 28

Complaints Management 28

Protection of Client Data 28

Employees Responsible Human Resources Activities 31

Corporate Culture and Management Principles 32

Employee Survey: Dialogue and Feedback 33

Training and Continuing Professional Development 33

Empowering the Next Generation 34

Equal Opportunity 35

Performance-Based Remuneration 38

Occupational Health Management and Safety 39

Corporate Environmental Protection Environmental and Climate Strategy 43

Organisation and Management 43

Engaging Our Employees 43

Greenhouse Gas Emissions 44

Electricity and Heat Consumption 46

Water Consumption 47

Paper Consumption 47

Mobility 49

Waste 49

Environmental Protection Along the Supply Chain 51

Climate-Friendly Food Choices 51

Social Commitment Our Beliefs 53

Community Service 53

Related Field Project Support 54

Cooperative Charitable Support 55

Sustainability Programme 56

GRI Content Index 61

Contacts and Office Addresses 66

INHALT

DG HYP | Sustainability Report 2015

Letter from the Management Board

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The Management Board of DG HYP: Manfred Salber and Dr Georg Reutter (Chairman)

Dear readers,

As an integral part of the cooperative financial network, DG HYP follows a tradition of over a hundred years of socially responsible actions. This legacy is the reason for us pursuing a corporate governance policy that is truly sustainable – eco-nomically, socially, and ecologically.

Sustainability is an integral part of our business strategy, and deeply rooted in our corporate culture. Via measurable goals, and measures that individual departments assume responsibility for, we pursue an active approach to sustainability. It is important to us that our approach aligns with our shareholders’ expectations. To better understand what it is that our shareholders expect, we conducted a materiality analysis with DZ BANK Group.

Not one, but two sustainability ratings confirmed in 2015 that DG HYP ranks among industry leaders when it comes to social and environmental performance. oekom research AG, a rating agency, has raised its rating of DG HYP to its prime status “C+”. DG HYP led the field in the ranking for “Public-sector Pfandbriefe” published by imug, another research and rating agency, and achieved good results in other categories as well.


Our business performed well during the year under review, despite a challenging market environment. We seized the opportunities available thanks to strong demand on real estate markets, and achieved the highest new business level in DG HYP’s Commercial Real Estate Finance business to date. The bank’s financial performance also remained at a positive level. For our clients, we proved to be a reliable financing partner, and our positioning in the market as a leading provider of commercial real estate finance was reaffirmed. Joint market coverage with the cooperative banks, which we intensified, contributed significantly to this performance.

Meeting the needs of our staff again was a key principle of our HR work in 2015. Based on the results of an employee survey conducted the previous year, we identified – together with our staff – in which areas we need to do better. We also expanded our offerings on training and continuing professional development, and intensified our efforts to support women in business. Further proof of the high level of quality in our educational work: Absolventa, a leading employment website, once more awarded our graduate trainee programme their “career-promoting and fair trainee programme” seal.

In terms of environmental management, we made great progress in the year under review and are well on the way to achieving a goal of reducing our greenhouse gas emissions 15 per cent between 2012 and 2020. The comprehensive retrofit measures at our Hamburg offices will play a major part in that as we expect significant energy efficiencies. In our Hamburg staff restaurant, we optimised our concept of climate-friendly food with a clearer focus on high-quality and regional products, whose origins and production chains are transparent.

True to our cooperative basic values of aiding empowerment, solidarity and partnership, we continued to supported social causes in 2015. For the third year in a row, we hosted and financially backed the annual meeting of the CLUB OF ROME schools. Further, we were honoured as an active supporter of the CLUB OF ROME schools.

To us, sustainability is a constant learning process – and this report is part of that process. It calls us to reflect on what we have achieved, and on what still lies ahead. We are looking forward to continuing along the path of sustainable business.

Hamburg, June 2016

Dr Georg Reutter Manfred Salber


Letter from the Management Board | Our Company | Sustainability Strategy | Sustainable Banking | Employees

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OUR COMPANYPART OF A POWERFUL GROUP


Corporate Environmental Protection | Social Commitment | Sustainability Programme | GRI Content Index

About DG HYPDG HYP is the commercial real estate bank of the Volks-banken Raiffeisenbanken cooperative financial network and one of the leading real estate banks in Germany. Our core business segment is Commercial Real Estate Finance, where we support real estate investors as well as approxi-mately 1,000 cooperative banks in Germany.

The focus of the business activities is on financing properties in the German market. In addition, we finance our German clients’ investment projects in selected international mar-kets. We are present all over Germany, with six Real Estate

Centres (Hamburg, Berlin, Dusseldorf, Frankfurt, Stuttgart and Munich), as well as five regional offices (Hanover, Kas-sel, Leipzig, Mannheim and Nuremberg).

As a member of DZ BANK Group and partner to the Volks-banken and Raiffeisenbanken cooperative banks, we are part of a strong financial network and able to offer attrac-tive, à la carte financings.

We owe our success to various factors: client proximity, pro-fessionalism and expertise, funding power, and a high de-gree of market penetration backed by an efficient network.

BerlinReal Estate Centre

Hamburg Real Estate Centre

Hanover Regional Office

Leipzig Regional OfficeKassel

Regional Office

Frankfurt Real Estate Centre

Stuttgart Real Estate Centre

Munich Real Estate Centre

Dusseldorf Real Estate Centre

Nuremberg Regional Office

Mannheim Regional Office

DG HYP’S LOCATIONS



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DG HYP – PART OF A POWERFUL GROUP

DG HYP is a member of the DZ BANK Group, which also comprises home loan savings specialist Bausparkasse Schwäbisch Hall, DZ PRIVATBANK, R+V Insurance, retail lender TeamBank, fund management specialists Union In-vestment Group, VR Leasing Group, as well as various other specialist financial services providers. The various DZ BANK Group entities are the cornerstones of a comprehensive range of bancassurance products and services offered by the Volksbanken Raiffeisenbanken cooperative financial network. Within this strong network, DZ BANK Group enti-ties work together to optimise the products and services delivered to cooperative banks and their roughly 30 million customers and clients. GRI G4-17

DZ BANK Group is a part of the Volksbanken Raiffeisen-banken cooperative financial network, which comprises

approximately 1,000 individual German cooperative banks and ranks among the largest financial services organisa-tions in Germany. Within the cooperative financial network, DZ BANK AG acts as the central institution for more than 850 cooperative banks with a total of 10,000 branches, and as a commercial bank.

Combining banking services with insurance products and services, as well as real estate financing and a range of services for securities investments, has a long-standing tra-dition within the Volksbanken Raiffeisenbanken coopera-tive financial network. The specialist institutions within the DZ BANK Group each offer highly competitive and reasona-bly-priced products in their respective area of expertise. This allows Germany’s cooperative banks to offer their clients an end-to-end range of first-rate financial services.



Our Values and Principles Sustainable action and corporate responsibility are two important pillars of our corporate culture. In light of eco-logical and social challenges in our society, it is a matter of importance that the sustainable orientation of our business activities grows more pronounced. We act responsibly in our day-to-day business.

Our actions are based on our core values: being reliable, being a good partner, and being motivated. These values are at the heart of our guiding principles, our leitmotif. They define the way we think, and translate into everything we do. We are close to our clients – thanks to a decentralised presence with six Real Estate Centres and regional offices,

and the cooperative banks with which we work on a suc-cessful partnership basis.

Our practical understanding of integrity and ethical busi-ness is clearly stated in our Code of Conduct. All employees are bound by the Code, which combines our internal prin-ciples with external market standards and reaffirms our commitment to sustainability.

3 http://dghyp.de/missionstatement (only available in German)3 http://dghyp.de/codeofconduct3 See also p. 20 et seq.

RELIABLEOur reliability value is epitomised by a rock-solid business model and conservative risk strategy – at the same time, it is our staff that turn this value into reality. We are perspicacious, down-to-earth, and conscious of our responsibility to society and the environment. As a Pfandbrief issuer and a member of the Volksbanken Raiff-eisenbanken cooperative financial network, we have strong funding sources at our disposal. In the market we are a partner that can be counted on.

A GOOD PARTNER Being in partnership requires fairness and trust; and trust requires proximity. These are principles which our employees have adhered to for more than 90 years. We are close to our clients – be it directly, through our Real Estate Centres and regional offices, or through approximately 1,000 individual cooperative banks. We value respect and fairness in the way we treat others. Through joint thinking and acting in partnership, we build the foundations for long-term business relationships.

MOTIVATED Our employees are highly motivated; they act independently and responsibly, taking the initiative. Their actions and behaviour determine DG HYP‘s reputation and success. We all have a common goal: to sustain-ably boost the success of cooperative banks and our clients, by offering them the best financing solutions possible. To us, any problem represents motivation to find new ideas and better solutions. This is the only way to continuously improve what we do.

OUR CORE VALUES



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Member of the UN Global Compact In 2008, DZ BANK AG became a signatory to the Global Compact of the United Nations, thereby committing itself to implementing the ten internationally acknowledged prin-ciples stipulated by the initiative for responsible conduct. In 2013, DG HYP followed suit in taking up these principles: they span human rights, labour norms and work against corruption. The progress made in the integration of these principles into our business divisions is documented in our continuous sustainability reporting. We define responsible corporate governance to include not only adherence to legal standards and requirements, but also to values and principles, together with clear and transparent manage-ment.

DZ BANK AG’s Communication on Progress for UN Global Compact can be found here 3 http://dghyp.de/UNGCen

Our Business ModelAs part of the DZ BANK Group, DG HYP is committed to the fundamental cooperative concept of sustainable and re-sponsible business practices. As part of our business model, we apply a conservative risk strategy, forge long-term busi-ness relationships and treat clients with honesty, trust, and a sense of partnership.

Focus on the Traditional Lending Business As a real estate bank, DG HYP focuses on the traditional lending business, whereby the loans it grants lay the foun-dation for long-term partnerships. The bank’s Commercial Real Estate Finance activities are focused on the core seg-ments of office, residential and retail properties. DG HYP is also involved in the specialist segments of hotels, logistics and real estate for social purposes, within the scope of its credit risk strategy. Target clients are private and institu-tional investors, housing companies, as well as commercial

1. Businesses should support and respect the protection of internationally proclaimed human rights; and

2. make sure that they are not complicit in human rights abuses.

3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

4. the elimination of all forms of forced and compulsory labour;

5. the effective abolition of child labour; and

6. the elimination of discrimination in respect of employment and occupation.

7. Businesses should support a precautionary approach to environmental challenges;

8. undertake initiatives to promote greater environmental responsibility; and

9. encourage the development and diffusion of environmentally friendly technologies.

10. Businesses should work against corruption in all its forms, including extortion and bribery.

www.unglobalcompact.org

THE UN GLOBAL COMPACT‘S TEN PRINCIPLES

WE SUPPORT



and residential real estate developers. When selecting expo-sures, our priorities are the quality of the client relationship, the third-party usability of the financed property, and col-lateralisation through first-ranking liens.

Close Cooperation with Cooperative BankDG HYP offers the German cooperative banks a high-per-formance range of products and services tailored to meet their specific needs. This allows the cooperative banks to offer their medium-sized clients larger-sized financing deals, or to diversify their risks. With DG HYP as a partner, new business activities in commercial real estate financing are bound to be successful.

The German cooperative banks contribute their regional market knowledge, and use the real estate and financing expertise of their partner within the cooperative bank-ing sector. In this context, both sides benefit from joint market coverage – DG HYP from the direct contact with regional clients, and the German cooperative banks from

the business relationships arising from developing the mar-ket throughout Germany. Further services in the financial network comprise the rating of real estate clients and the valuation of properties through VR-WERT, a wholly-owned subsidiary of DG HYP. GRI G4-17

3 2015 Annual Report, p. 16 et seq.

Good Ratings Confirmed Standard & Poor’s (S&P) reviewed and confirmed DG HYP’s good ratings in the 2015 financial year. S&P paid tribute to DG HYP’s successful business model as a real estate bank deeply integrated in the strongly capitalised, highly profit-able Volksbanken Raiffeisenbanken cooperative financial network. DG HYP’s Pfandbrief issues have retained their top triple-A rating, thanks to the high quality of our cover assets pools.

3 2015 Annual Report, p. 10

Rating overview Long/short-term liabilities/Outlook A+/A-1/stable Issuer credit ratingPublic Pfandbriefe AAA Public Pfandbriefe (Senior Secured)Mortgage Pfandbriefe AAA Mortgage Pfandbriefe (Senior Secured)Bearer bonds A+ Senior Notes (Senior Unsecured)



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Business Development DG HYP’s new Commercial Real Estate Finance business developed favourably during the year under review. The high degree of market liquidity – thanks to the monetary policy measures by the European Central Bank (ECB) – and the persistently low interest rate environment supported intense investor demand for commercial property financ-ings. DG HYP bases its financing decisions on the quality of the client relationship, as well as on its assessment of the property from a risk and return perspective. Despite a persistently challenging competitive environment, DG HYP managed to increase its new business volume of commer-cial real estate financings in the 2015 financial year. New business grew by 15.8 per cent as at 31 December 2015, to € 5,722 million (2014: € 4,941 million). The German core market accounted for €5,637 million thereof (2014: €4,709 million), in line with DG HYP’s strategic focus. New business of €85 million was generated on the international markets (2014: €232 million).

Joint Lending Operations Increased Slightly DG HYP successfully maintained cooperation within the Volksbanken Raiffeisenbanken cooperative financial net-work during the year under review. Joint lending business with the cooperative banks totalled €2,825 million as at 31 December 2015 (2014: €2,617 million). This development shows that Commercial Real Estate Finance – as part of the corporate client business – is attracting great interest and a persistently strong response amongst cooperative banks. At present, DG HYP cooperates with more than 400 coopera-tive banks in this business.

Development in Other SegmentsIn the interests of the Volksbanken Raiffeisenbanken coop-erative financial network, DG HYP supports the coopera-tive banks as they respond to financing enquiries from the public sector. In this way, the cooperative banks are able to reinforce their presence on the market and build up fur-ther business relationships with local authorities. During the 2015 financial year, DG HYP generated new business with a volume of €378 million (2014: €359 million) in the area of local authority lending.

There have been no new investments in Mortgage Backed Securities (MBS) since mid-2007. Moreover, within the framework of its strategic realignment, DG HYP suspended its public finance and interbank lending activities in 2008. The related portfolio of sovereign and bank loans has been reduced as planned, from €38.5 billion at the end of 2007 to €9.9 billion as at 31 December 2015. The MBS portfolio was cut from €4.5 billion to €1.3 billion during the same period. DG HYP will continue to adhere to this strategy – implementing the scheduled portfolio reduction – in the years to come.

Also in the context of the bank’s strategic realignment, DG HYP has continuously wound down its private home loan financing portfolio since 1 January 2008. As at 31 De-cember 2015, DG HYP’s portfolio included some 41,000 retail customers, accounting for lending volume of approxi-mately €2.3 billion.

3 More on the business development in the year under review: 2015 Annual Report, p. 24 et seq.



VR WERT VR WERT, a wholly-owned subsidiary of DG HYP, performed well during the 2015 financial year: it issued 2,370 ex-pert valuations, slightly below the previous year’s figure of 2,588. Revenues were €8.8 million (2014: €8.9 million). GRI G4-17

Investor Base and FundingAs the provider of commercial real estate financing within the Volksbanken Raiffeisenbanken cooperative financial network, DG HYP’s capital markets funding is based pri-marily on Mortgage Pfandbriefe issuance. During the 2015 financial year, DG HYP placed a total of three benchmark bonds with a total volume of €1.5 billion (2014: €0.5 bil-lion). The maturities of these much sought-after Mortgage Pfandbrief issues covered terms of three, six and nine

years. The declining volume of private placements over re-cent years, due to the preferential regulatory treatment of benchmark bonds, became further entrenched in the 2015 financial year. Despite this trend, DG HYP managed to sell smaller-sized Mortgage Pfandbrief issues totalling €207.0 million (2014: € 1.0 billion). At the year-end, DG HYP’s outstanding Pfandbrief issues totalled €22.4 billion (31 De-cember 2014: €24.8 billion).


3 Economic environment and development of the real estate market in general: 2015 Annual Report, p. 20 et seq. and p. 24 et seq. 3 More on our banking business: p. 24 et seq.

THE COOPERATIVE BASIC VALUE OF AIDING EMPOWERMENT

When Friedrich Wilhelm Raiffeisen and Hermann Schulze-Delitzsch founded the first financial cooperatives – in Germany, about 160 years ago – little did they know that they were writing the first pages of a tremen-dous success story. Today, financial cooperatives are deeply rooted in many markets. While they come in dif-ferent structures, they have one thing in common: their members are owners and clients at the same time. This principle is the main differentiation between cooperatives and other forms of cooperation.

In cooperatives, people unite voluntarily to engage in economic activity together and advance their mem-bers’ business activities in their own right, i.e. not accepting third-party or governmental support. It is this advancement – and not the distribution of yield – that is given priority.

Fundamental decisions are taken by the general meeting, where every member has one vote, irrespective of their equity stake. This is to protect democratic principles, to avoid individual majority owners dominating and to prevent an unsolicited takeover.

Every cooperative is also a member of an Auditing Association. These associations advise their members where needed, and audit the financial condition as well as the regularity of the management. Against this background, cooperatives have been the by far most bankruptcy-proof legal structure that Germany has to offer for many years.

3 www.genossenschaften.de



1414

SUSTAINABILITY STRATEGY TRUSTFUL COMMUNICATION,

APPRECIATIVE INTERACTION

Expo Real trade fair, Munich

“DG HYP meets immoebs“ – an event hosted by DG HYP Property visit with DG HYP‘s Advisory Council“DG HYP meets IMMOEBS“ – an event hosted by DG HYP



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Our Approach to Sustainability As the commercial real estate bank in the Volksbanken Raiff eisenbanken cooperative financial network, we look back on a corporate history spanning more than 90 years. Uniting business and social responsibility has always been an integral part of our corporate culture. To us, sustainabil-ity means that we must satisfy the needs of today’s genera-tions, and offer them fair opportunities for development – without compromising the chances of future generations or threatening our natural livelihood. We thus agree with the Brundtland Commission Report, published in 1987.

To us, sustainable development is a constant learning proc-ess, one which helps reveal potential for improvement in various businesses, as well as directions as to how we can better overcome current and future challenges and seize new chances in new ways. This not only includes a risk-aware banking business, but also efficiently using and conserving natural resources and a forward-looking HR approach to demographic change. GRI G4-18, G4-19

Along the road to sustainability, we need benchmarks. That is why, in 2013 we committed ourselves to the ten interna-tionally acknowledged principles stipulated by the Global Compact of the United Nations, and in 2014 we imple-mented a Group-wide Code of Conduct. We define respon-sible corporate governance to include not only adherence to legal requirements, but also to values and principles.

3 Values and Principles: p. 9 3 Responsible Corporate Governance: p. 20 et seq.

DG HYP is confident that by acting sustainably, we will gain a competitive edge in the medium term. For a Pfandbrief issuer that specialises in commercial real estate, the effects felt in direct competition in the market should be less pro-nounced. Open communications, attractive working condi-tions and a fair, appreciative approach to all stakeholders help us to create and maintain relationships that are built on trust, to avoid risk-taking and to use opportunities when they arise. Regular communication with our stakeholders and transparent reporting are key elements of our sustain-ability strategy. GRI G4-26

3 Materiality: p. 19 et seq.

Sustainability ManagementThe responsibility for the issue of sustainability lies with the Chairman of the Management Board of DG HYP. This reflects the strategic significance we place on sustainability, and ensures top management attention concerning imple-mentation.

The Sales Management and Investor Relations department is in charge of coordinating all activities related to sustainabili-ty; the head of this department reports internal and external developments to the Management Board. This department is the first point of contact for all other departments when questions concerning sustainability and/or the implementa-tion of sustainability programme measures arise. It monitors all sustainable actions, and makes suggestions regarding the advancement of the sustainability programme together with the affected divisions. Furthermore, it serves as first point of contact for internal and external stakeholders and is responsible for reporting.

Sustainability is a cross-divisional responsibility. To en-sure that it is addressed across all management levels and divisions, various departments formally assumed responsi-bility for sustainability-related topics and implementation of measures in their division. This approach has proven a success in anchoring sustainability all over the bank. With this allocation of responsibilities, we want to raise aware-ness in all divisions for our understanding of successful busi-ness operations: we believe that success is not defined by economic metrics only, but also by a conscious take on the ecological and social consequences of our daily activities.

DG HYP also applies economic, environmental and social criteria when choosing its suppliers, based on Group-wide sustainability standards for suppliers established in 2012. We give preference to local suppliers and service providers, meaning they are located close to one of our offices.

3 http://dghyp.de/suppliers3 Human Rights: p. 233 Environmental Protection Along the Supply Chain: p. 51


Sustainability Programme Our Sustainability Officer develops a sustainability pro-gramme for DG HYP in cooperation with the relevant de-partments. The sustainability programme describes the goals that we have set for ourselves in individual areas, and how we want to achieve them. Current and planned meas-ures to continuously improve our sustainability performance are linked to a schedule. Achievement and implementation status of these goals – and the corresponding measures – are reviewed in internal audits. This system ensures that the sustainability programme is being put into practice consist-ently and in a targeted manner.

The segmentation of the central areas of activity, together with the allocation of objectives and measures of our sus-tainability programme were adjusted during 2015, accord-ing to the principle of materiality, adding two new areas: “Sustainability Strategy and Corporate Governance” as well as “Sustainable Banking Business”. This structure – with two areas instead of one “Economic Responsibility” dimen-sion – is a better reflection of the issue’s complexity: when

addressing sustainability, we touch upon cross-divisional questions regarding strategy and management, while still focusing on our core business as a real estate bank. The three remaining areas “Employees”, “Ecological Responsi-bility” and “Social Commitment” correspond with the clas-sical dimensions every company needs to deal with when looking at its economic, environmental and social responsi-bility. GRI G4-19, G4-22

3 Our Sustainability Programme: p. 56 et seq.

Stakeholder DialogueTrust is fundamental for the feasibility and success of co-operative projects, and an important factor in stakeholder communications. It shows in the strength of the dialogue we foster with our stakeholders, which include clients, business partners, employees, analysts and investors, but also associ-ations, political decision-makers, media and academia. We also regularly communicate with non-governmental organi-sations, whose queries and issues we address.GRI G4-24,G4-25

DZ BANK GROUP’S CORPORATE RESPONSIBILITY COMMITTEE (CRC)

With a view to integrating sustainability to an even greater extent in the business processes, DG HYP is playing an active role in DZ BANK Group’s sustainability market initiative. This initiative aims to bundle sustainability-related activities, take advantage of market opportunities, avoid risks and foster the active exchange of knowledge and experience between the members of the Group. For this purpose, a permanent Corporate Responsibility Committee (CRC) was formed in 2014, of which DG HYP is a member. The results of this collaboration are, for example, the introduction of a Group-wide database structure, common supply standards and a coordinated environmental and climate strategy.



Anchoring sustain-ability in business strategy

Transparent reporting

Regular stakeholder communications

Adherence to legal requirements, and to values and principles

Sound business model, with a conservative risk strategy

Long-term relationships with business partners

Powerful funding options through

> the Volksbanken Raiffeisenbanken cooperative fi nancial network

> issuance of Mortgage Pfandbriefe

SUSTAINABLEBANKING

EMPLOYEES

Performance-based remuneration

Work/family balance

Occupational health management

Extensive CPD offers

Empowering the next generation

ECOLOGICAL RESPONSIBILITY

Reducing the use of energy and resources

Reducing CO2 emissions

Enhancing employees’ ecological awareness

SOCIAL COMMITMENT

Support for social projects and non-profi t organisations

Promoting issues and organisations with real estate topics

Support for research institutes dealing with the cooperative sector

Supporting employees’ voluntary engagement

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SUSTAINABILITY STRATEGY AND

CORPORATE GOVERNANCE

Being in dialogue enables us to better respond to the vari-ous stakeholders’ concerns and requests and provides us with an initial understanding as to how the opportunities and risks associated with our business activities are per-ceived in the outside world. The importance of building lasting relationships with our stakeholders is therefore also a strategic one; it lays the groundwork for the continuing development of our sustainability programme. GRI G4-26

3 Stakeholder Focus and Materiality: p. 19 et seq.3 Client Dialogue and Complaints Management: p. 28

Employee Dialogue We foster a culture of dialogue, openness and mutual re-spect in our bank, and our employees play an active part in decision-making processes. In addition to extensive per-sonal communication, we use our intranet to keep employ-ees constantly informed about what is going on in the bank and its divisions.

To further intensify the dialogue with our employees, we regularly conduct online employee surveys to assess the bank’s development from the perspective of its employees. The most recent survey, held in 2014, provided a represent-ative overview of the sentiment among the employees with a participation ratio of 81 per cent. A good way of meas-uring employee satisfaction is the Organizational Commit-ment Index (OCI) indicating an employee’s attachment to their company. DG HYP achieved a good result, with a score of 78. However, the survey also pointed out potential for improvement, which we have been addressing systemati-cally ever since. GRI G4-24, G4-26

3 More on the employee survey: p. 33

Employees also have a powerful voice in the materiality analysis, whose results influence our sustainability reporting and the further development of our sustainability pro-gramme.

3 Stakeholder Focus and Materiality: p. 19 et seq.



Cooperative Bank Dialogue The cooperative banks are amongst our most important stakeholders. To support the dialogue with them, we have instituted an Advisory Council comprising representatives of the cooperative banks, in addition to personal meetings and visits with our sales staff. The Advisory Council supports DG HYP’s Management Board as part of an intensive ex-change of ideas. We also organise various events designed to encourage a sense of togetherness. GRI G4-24, G4-25, G4-26

We discuss professional topics openly, and involve the Managing Directors of the cooperative banks in discussions with our real estate clients. Through our IMMO PARTNER dialogue, we created another nationwide concept that pro-motes more intensive collaboration with the cooperative banks. We also organise regional real estate conferences, to expand our network and client contacts. With regular re-ports on real estate markets, particularly regional ones, and our IMMO KOMPAKT publication, we increase transparency on our business activities to support cooperative banks in their daily work on the markets they are active in.

Capital Markets and Rating Agencies DialogueWe strive for transparency in all communication with part-ners in the capital markets. We cultivate investor relations intensively, with both larger-scale events and one-on-one briefings. In addition to the annual and interim reports, we publish market-relevant information. Our Debt Issuance Programme (DIP) offers standardised documentation for the issuance of medium- and long-term bonds on the capital market. This is published with the Luxembourg Stock Ex-change, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – "BaFin"), and the German Federal Gazette (Bundesanzeiger). It is available on DG HYP's website, amongst other places. We are also in constant and extensive dialogue with rating agencies and analysts for financial and sustainability ratings. GRI G4-24, G4-25, G4-26

Dialogue with Society and PoliticsDG HYP communicates with social and political decision-makers mainly via associations it holds a membership with. These include the National Association of German Coopera-tive Banks (Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e.V. – “BVR”), the Association of German Pfandbrief Banks (Verband Deutscher Pfandbriefbanken e.V. – “vdp”), the German Property Federation (Zentraler Immobilien Ausschuss e.V. – “ZIA”) and the German Inves-tor Relations Association (Deutscher Investor Relations Ver-band e.V. – “DIRK”). We support efforts towards a more stable financial system as well as the interests of Pfandbrief issuers and the economic and non-economic interests of the real estate sector. GRI G4-24, G4-26 We are also an active member of the Association for Environmental Management and Sustainability in Financial Institutions (Umweltmanagement und Nachhaltigkeit in Finanzinstituten e.V. – “VfU”), a network of environmen-tal and sustainability managers at leading financial services providers, and engaged intensively in its forum for sustain-able lending in the year under review. The VfU provides its members with a platform to exchange subject-matter knowledge and information, and to maintain an interesting dialogue with experts and representatives of non-govern-mental organisations. We also take part in a round table with the United Nations Environment Programme Finance Initiative (“UNEP FI”), where recent developments and progress made in the realms of sustainable finances and sustainability management are discussed.

We consider ourselves an independent, politically neutral institution, and ceased to support political parties in 2005.



Stakeholder Focus and MaterialityOur reporting on sustainability is designed to meet our stakeholders’ information requirements on the one hand, and to reflect the sustainability issues that are of major im-portance to us as a bank on the other. This is what the Global Reporting Initiative (GRI) – the standard our reporting is based on – defines as the principle of materiality. While in the past we regularly requested feedback from our stake-holders to help us identify “relevant” or “material” topics, in 2015 we also conducted a systematic materiality analysis to determine which sustainability-related aspects are con-sidered important by DG HYP and various stakeholders. The analysis was designed as an online survey, in which we and DZ BANK Group invited external and internal stakeholders to participate. GRI G4-18, G4-23

When selecting the stakeholders to participate in the survey, we took various aspects, such as diversity and relevance for our bank, into account: GRI G4-25

• Our most important stakeholders are cooperative banks as clients and owners, corporate and private clients of Group entities, as well as our bank’s and DZ BANK Group’s employees.

• Suppliers and service providers, as well as associations and investors, are of high economic relevance.

• Criticism voiced by non-governmental organisations,

rating agencies, policy makers or academia, was also taken into consideration. GRI G4-24

The 2015 survey spanned five areas with subordinated as-pects and was based on an analysis of sustainability trends we are currently witnessing in our society. With a response rate of 46 per cent, it yielded valuable indications as to what we should report and work on. GRI G4-18

DG HYP’S ASSOCIATION MEMBERSHIPS

• Federal Association of German Credit Unions and Rural Banking Cooperatives (BVR)

• Cooperative Association Weser-Ems

• Cooperative Association, Frankfurt/Main

• Cooperative Association Rhineland-Westphalia

• Cooperative Association Baden-Württemberg

• Cooperative Association Bavaria

• German Cooperative and Raiffeisen Confederation (DGRV)

• Association of German Pfandbrief Banks (vdp)

• Association of German Pfandbrief Banks (vdp)

• Urban Land Institute (ULI Europe)

• Association for Environmental Management and Sustainability in Banks (VfU)

• German Investor Relations Association (DIRK)



The results on Group-level were then evaluated by each entity, the external stakeholders’ responses compared to internal perceptions, and displayed in a materiality matrix (see chart). The matrix shows that both surveyed groups attribute “Sustainable Corporate Governance” and “Sus-tainable Products and Services” the highest level of rele-vance. Within these areas, they ranked “Cooperative Prin-ciples and Values” and “Corporate Strategy and Success” highest. The results confirm the need for sustainability to be approached as a strategic cross-divisional responsibility, and to be systematically integrated into the core business. For DG HYP, this means that the principle of sustainability, which is already enshrined in the cooperative model, needs to be worked out more clearly. GRI G4-27

For the future, we will conduct such materiality analyses on a regular basis, as they provide us with valuable information on the scope we should aim for in our sustainability report-ing. They help us review our strategy and, where necessary, rework our sustainability programme. GRI G4-26

Responsible Corporate GovernanceGood corporate governance and sustainable economic management require compliance with legal and regulatory regulations, the responsible management of risks, protec-tion of the bank’s reputation, and the implementation of transparent business processes. Our Corporate Governance policy provides a framework that spans all legal concerns and operational principles.

Relevance for external stakeholders

3,5 4,0 4,5 5,0 5,5 Relevance for DZ BANK Group

1

3

4

5

2

3,5

4,0

4,5

5,0

5,5

Corporate governance

Employee responsibility

Ecological responsibility

Products and services

Social commitment

MATERIALITY MATRIxGRI G4-19, G4-20, G4-21



Corporate Governance At DG HYP, we apply a model of dual leadership. Two Managing Directors lead the company according to existing statutory provisions, ensuring compliance within DG HYP. The Supervisory Board and its committees monitor and ad-vise the Management Board.

DG HYP’s internal regulations – for example the Articles of Association and Internal Rules of Procedure – comply with legal requirements. The Supervisory Board consists of 18 members. In accordance with the German Act to Simplify the Election of Employee Representatives to the Supervisory Board (Drittelbeteiligungsgesetz), it comprises twelve mem-bers elected at the Annual General Meeting and six mem-bers elected by employees. 22 per cent of Supervisory Board members are female, an 11 per cent rise on 2014.

The Management Board informs the Supervisory Board about relevant plans and developments at an early stage, with special attention paid to conveying the risk situation.

3 Target quota for women on the Supervisory Board, the Management Board and the upper management: p. 36

Risk ManagementAs an integral part of DG HYP’s strategic and operative management of the bank as a whole, our risk manage-ment is closely integrated into the risk management and risk control systems of DZ BANK Group. Assuming risks in a targeted and controlled manner, observing target returns, is an element of our enterprise management. The activi-ties driven by DG HYP’s business model require the ability to identify, measure, assess, manage, monitor and com-municate risks. In addition, maintaining an adequate level of equity backing for risk exposure is a prerequisite for our business. As a guiding principle for all of its business ac-tivities, DG HYP assumes risk only to the extent required to achieve the objectives of its business policy and where the risks seem controllable.

To implement this principle, DG HYP’s Management Board has defined risk strategies for material risks which are in line with Group guidelines, and which are based on the bank’s business strategy. Each of these sub-risk strategies comprises the business activities exposed to risk, the risk management objectives (including provisions concerning risk acceptance and avoidance), and the measures designed

to achieve these objectives. The business and risk strategy, as well as the sub-risk strategies, were discussed with the Supervisory Board.

The regulatory organisational requirements and the allo-cation of risk management responsibilities are set out, in particular, in the Minimum Requirements for Risk Manage-ment (Mindestanforderungen an das Risikomanagement – “MaRisk”). DG HYP meets these requirements. We have also implemented risk management and risk control systems that fulfil the needs arising in the market and competitive environment. This forms the basis that ensures the proper operation and efficiency of the risk management process.

3 For more information, please see Report on Expected Developments, Opportunities and Risks in our 2015 Annual Report, p. 51 et seq.

Remuneration Oversight Committee and Remuneration Officer After DG HYP was classified as a material institution pursu-ant to the German Regulation on Remuneration in Finan-cial Institutions (Institutsvergütungsverordnung – “Instituts-VergV”) in 2013, the Supervisory Board established a Remuneration Oversight Committee in early 2014. The Committee supports the Supervisory Board in monitor-ing whether remuneration systems for the bank’s staff are appropriate, and in assessing the impact of remuneration systems on the management of risk, capital and liquidity. This applies, in particular, to the Management Board as well as to employees whose activities have a material impact on the bank’s overall risk profile, and to the heads of Risk Controlling and Compliance. Furthermore, the Remunera-tion Oversight Committee prepares the Supervisory Board’s resolutions concerning the remuneration for Managing Directors.

The Management Board also appointed a Remuneration Officer and a deputy, in compliance with the InstitutsVergV. The Remuneration Officer reports to the Management Board. He/she functions as supervisor, advisor and reporter for the Remuneration Oversight Committee. The Remuner-ation Officer prepares an annual remuneration oversight re-port on the appropriateness of the bank’s remuneration sys-tems. In accordance with legal and regulatory requirements, we publish information on our remuneration systems on our website. The general standards of these systems, including



employer/works council agreements (Betriebsvereinbarun-gen), are transparent and accessible to all employees in the central handbook for our organisation.

3 Performance-Based Remuneration: p. 38 3 Information on remuneration systems: http://dghyp.de/remuneration (available in German only)

Transparent Financial Reporting DG HYP meets applicable reporting standards to ensure dis-closures are comprehensive and transparent in the Annual Report and Interim Reports. The financial statements are prepared by the Management Board and examined by both external auditors and the Supervisory Board. The financial statements are confirmed by the Supervisory Board.


Compliance Sustainable economic management requires compliance with all applicable legal requirements, regulations and self-commitments as well as internal guidelines. As a financial services provider, the trust and safety of our stakeholders are of enormous importance to us. Countering corruption and bribery, and preventing money laundering and fraud, are therefore amongst the core principles of our business activity. Our Compliance Office advises and supports our business units in implementing and fulfilling legal require-ments and ensures a constant exchange of information.

It is organisationally aligned with the central office for money laundering, fraud prevention and data protection management, and has a direct organisational, substantive and disciplinary connection to the Management Board, to preserve its independence. The Compliance Office evaluates and monitors compliance with regulations and ensures the proper conduct of our employees. It identifies violations, and sanctions them accordingly, and is active in preventing money laundering, terrorism financing and fraud. Further-more, it cooperates closely with Risk Controlling’s opera-tional risk group to identify, assess and manage risks. With uniform instruments for the identification of operational

risks and processing feedback from risk analyses, DG HYP ensures that the risk of losses is minimised and eliminated at an early stage.

In the year under review, no complaints regarding anti-competitive conduct, cartelisation or monopolisation were registered.

Prevention of Money Laundering, Terrorism Financing and Fraud DG HYP’s anti-money laundering policies are designed to prevent the circulation of illegally obtained funds. To ac-complish this, suitable principles and procedures have been developed in line with statutory provisions that are moni-tored internally on an ongoing basis. The same applies for the financing of terrorism. Internal training raises employee awareness of these issues.

Fraud prevention is another part of DG HYP’s proper busi-ness organisation. The bank evaluates all potentially action-able, internal and external practices which could endanger its assets, and sets measures to prevent any wrongdoing.

Every two years, we train our employees on meeting ap-plicable laws and regulations, as well as combating money laundering and fraud. The effectiveness of the aforemen-tioned prevention measures are evaluated on an annual basis as part of the risk analysis.

While suspicious activity reports were filed, they did not re-sult in incidents relevant under criminal law in 2015.

Whistleblowing SystemTo prevent white-collar crime and deter unauthorised in-fluence from being exercised on our employees, DG HYP has instituted a whistleblowing system. As part of this sys-tem, employees can relay information about non-compliant practices, serious violations or other failings to an internal Compliance Officer – confidentially, and without their name being disclosed. The Officer then investigates the incident and takes necessary measures. The Officer may also involve an emergency committee.



Human RightsAdhering to and honouring human rights is a prerequisite for DG HYP’s day-to-day business. As our business activities are focused on commercial real estate finance in Germany, human rights abuses such as child and forced labour are not an issue. Further topics such as equal treatment, anti-discrimination or data protection are addressed in internal regulations, prevailing principles and the Group’s Code of Conduct.

DG HYP has pledged to ensure that human rights are ad-hered to along its supply chain. In 2012, the Group elabo-rated sustainability standards that require suppliers to meet certain social and environmental requirements. These re-quirements are based, amongst others, on the principles stipulated by the Global Compact of the United Nations, the Code of Conduct published by the German Associa-tion Supply Chain Management, Purchasing and Logistics (Bundesverband Materialwirtschaft, Einkauf und Logistik e.V. – “BME”), as well as on the relevant conventions of the International Labour Organisation (ILO). Suppliers with a total business volume of €100,000 or more commit them-selves to meeting the sustainability requirements through a self-declaration.

Data Protection DG HYP guarantees that personal data is protected, and only used for specific purposes. In addition, we implement technical and organisational security measures. These are constantly improved in step with technological advance-ments, and monitored by an internally appointed Data Pro-tection Officer. In performing his data protection duties, this person is free from external influence or other instructions and reports directly to the Management Board. The Data Protection Officer is responsible for new employee induc-tion, conducting training, and providing updates concern-ing developments in data protection law. All employees are bound to confidentiality, pursuant to section 5 of the German Federal Data Protection Act (Bundesdatenschutz-gesetz), and are familiar with the provisions of the Data Protection Act and data protection requirements. For train-ing and regular refreshers in data protection, our employees

can turn to both the intranet and the DG HYP process por-tal’s data protection learning programme.

There were no relevant infringements of data protection regulations during 2015.

3 Protection of Client Data: p. 28

German General Equal Treatment Act Our employees, especially our executive staff, receive regu-lar training on the German General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz). New employees receive this training at the very start of their career with DG HYP. In the year under review, no violations or com-plaints regarding non-compliance with the German General Equal Treatment Act were registered.

3 Equal Opportunities: p. 35 et seq.

Our Code of Conduct To hold us accountable beyond legal requirements and market standards, we developed our own set of internal rules and values, upon which our Guiding Principles and Management Guidelines are based, and which are also reflected in our Code of Conduct developed jointly with DZ BANK Group.

Our Code of Conduct is a risk prevention, leadership and communication tool, and documents our understanding of ethical and responsible conduct. The Code of Conduct serves as a framework of minimum standards that are then further specified through internal instructions, guidelines and the central handbook for our organisation. Apart from basic rules to counter corruption and bribery, money laun-dering, financing of terrorism and white-collar crime, our Code of Conduct provides guidelines on sustainability and responsibility vis-à-vis our clients, business partners and em-ployees. It serves as a compass for our daily conduct, and has been communicated to all employees, via our intranet as well as by other means.

3 http://dghyp.de/codeofconduct




2424

SUSTAINABLEBANKING ASSURING THE COMPANY‘S

SUCCESS IN THE LONG RUN

© EUREF AG

© Jörg Hempel

© Art-Invest Real Estate

Kö-Bogen, Dusseldorf certified “Platinum” for Leadership in Energy and Environmental Design (LEED)

EUREF Campus, Building 14, Berlincertified “Platinum” for Leadership in Energy and Environmental Design (LEED)

Berliner Bogen, Hamburgcertified “Silver” by the German Sustainable Building Council



25

Our Core BusinessReal estate represents an important economic factor in Ger-many, and is of tremendous social significance. As such, commercial real estate finance is an indispensable core busi-ness area of the Volksbanken Raiffeisenbanken cooperative financial network. As a specialist centre of expertise and contact for the cooperative banks, DG HYP plays a key role in this context.

3 Business Model: p. 10 et seq.

Every day, when making financing decisions, we are con-fronted with questions of sustainability. The criteria we apply to each real estate project comprise both strict risk and return considerations, and social and environmental aspects. According to these criteria, VR WERT, a wholly-owned subsidiary of DG HYP, prepares lending and market valuations that assess properties in terms of the following aspects: GRI G4-17

• economic quality, e.g. occupancy, flexibility of property structure, and efficiency of ground plan;

• technical quality, e.g. construction, fire safety, sound-proofing, facilities engineering, room quality, demolition options, recyclability, materials employed;

• functional quality, e.g. location, accessibility for people with disabilities and the general public, space efficiency;

• socio-cultural quality, e.g. architecture, city planning, design, comfort, user satisfaction,

• ecological quality, e.g. waste and contamination audits, product selection, effects on global and local environ-ment, sustainable use of resources;

• lifecycle quality, e.g. re-lettability, stability of value in-cluding third-party usability, and costs for conserving the value of the property.

The objects to be financed generally fulfil standards such as the certificate of the German Sustainable Building Coun-cil (Deutsche Gesellschaft für Nachhaltiges Bauen e.V. – “DGNB”) or the Leadership in Energy and Environmental Design (“LEED”) of the U.S. Green Building Council. These standards are frequently established for local authority com-pliance when real estate is allocated, and they are checked as part of a certification process. They are also essential to the value and resale value of the property, and play an im-portant role in the lending valuation of VR WERT and in our financing decision.

The high quality of VR WERT’s valuations was confirmed in 2015 by HypZert GmbH, an entity established by lead-ing associations of the German financial sector, with the “Approved by HypZert” hallmark.


12/2012 12/2013 01/2015

imug results* 2013 rating 2014 rating 2015 rating Public-sector Pfandbriefe positive very positive (A) very positive (AA)Mortgage Pfandbriefe neutral neutral (CC) positive (BB)Uncovered Bonds neutral positive (B) positive (BB)*The A, AA, B, BB and CC classification was not introduced until 2014.

AA imug Rating for DG HYP Pfandbrief IssuesIndependent sustainability ratings have not only become part of the decision criteria for many institutional investors, they also help us to continuously review our sustainability performance and improve it where needed.

The sustainability rating issued by imug, a research and rating agency, showed DG HYP at top rank in 2015 (as of January 2016). We led the field in the ranking for “Public-sector Pfandbriefe”, ranked amongst the top 4 of German institutions in the “Uncovered bonds” category and amongst the top 6 for mortgage Pfandbriefe.

oekom research AG, another rating agency, raised its rating of DG HYP to “Prime Status”, with “C+” on a scale from A+ to D–, in its most recent sustainability rating. The Prime Status is awarded to companies which, according to the oekom Corporate Rating for social and environmental performance, rank among the leaders in their industry. DG HYP performed well in all of the following categories: staff and suppliers, corporate governance and business ethics, as well as products and services.

oekom results



THE PFANDBRIEF: A SUSTAINABLE INVESTMENT

Pfandbriefe are covered bonds with a dual recourse feature. They

are considered a safe haven in the investment universe since, in

case of the issuer becoming insolvent, investors also have recourse

to the cover assets pool. The value is defined through the Ger-

man Pfandbrief Act (Pfandbriefgesetz), which establishes specific

security mechanisms for investor protection and the basis for the

high quality of the Pfandbrief. To issue Pfandbriefe, a licence is

needed, which the Federal Financial Supervisory Authority (Bun-

desanstalt für Finanzdienstleistungsaufsicht – “BaFin”) grants only

when certain minimum requirements are fulfilled. Furthermore,

the Pfandbrief issuer needs to have a risk management system in

place that is appropriate for Pfandbrief business, and identifies,

assesses, manages and monitors all risks associated with it. The

high quality of the Pfandbrief also rests in the strict requirements

with regards to the cover assets pool: pursuant to the German Pfandbrief Act, only real estate loans, and

only up to the first 60 per cent of the mortgage lending value, are eligible as cover pool assets for Mortgage

Pfandbriefe. Therefore, the Pfandbrief is in every sense a long-term funding vehicle that meets investors’

security and transparency criteria – even in difficult capital market phases.

With the help of our conservative risk strategy and our internal credit guidelines, we have laid the ground-

work to continue delivering, consistently and uniquely, the high quality standards of our Pfandbrief issuance.



Reinforcing Sustainable Lending Over the next five years, we want to shape our lending process to fit the mould of sustainability criteria even better. A first step was taken in September 2015 with the estab-lishment of the “Sustainability and Lending” working group within DZ BANK Group’s Corporate Responsibility Commit-tee (CRC). DG HYP is part of this group.

Client Satisfaction Client satisfaction is a major success factor for our busi-ness. This is why we regularly review our performance and engage in dialogue with our clients, who include housing companies, investors, as well as commercial and residential real estate developers. We present our products and serv-ices extensively with information materials, in personal dis-cussions, regular meetings, a series of events, and on our website.

3 Stakeholder Dialogue: p. 16 et seq.

Recognising our performance as a bank, the European Real Estate Institute (EUREB-Institute) in 2015 honoured us with their “REAL ESTATE BRAND AWARD” in the “Banking” cat-egory, naming us as the most powerful real estate brand of 2014 for the first time. The annual award is based on a representative survey amongst 11,750 industry experts con-cerning the power of the 435 most important real estate brands and companies in ten categories. The brands and companies are evaluated according to 22 criteria, including reliability, performance competence, client loyalty, recom-mendation intention, and brand awareness. The main rea-sons for our high ranking were the “regional competence” and “client service” performance criteria, where we im-proved considerably. The award is a reflection on the bank’s successful positioning in the German real estate market, and its significance for the Volksbanken Raiffeisenbanken cooperative financial network.

Complaints Management As we follow a process of continuing improvement, we aim to increase client satisfaction. To capture and manage com-

plaints systematically, we developed a complaints manage-ment system that lies within the direct responsibility of the Management Board. Our clients, cooperative partners and other third parties may contact Complaints Management by phone, email or in person.

All complaints received are reviewed in the divisions on a monthly basis, and assessed according to definitive criteria to ensure that effective measures can be developed. In general, we seek to resolve misunderstandings and difficul-ties at an early stage and in direct talks with our clients – and to find individual solutions, so as to avoid complaints altogether.

Protection of Client DataBeing open with our clients and treating them fairly is part of who we are as a bank. This approach also includes pro-tecting their data, and using this data only in accordance with applicable law. We guarantee our clients that their personal data will be protected and only used for specific purposes. Pursuant to our internal Data Protection Policy, which is mandatory for all employees, our staff are obliged to comply with the data protection laws and regulations that apply to their activities, and receive adequate training. We have technical and organisational data security meas-ures in place that are constantly improved in step with tech-nological advancements, and monitored by an internally appointed Data Protection Officer. In performing his or her duties, this person is free from external influence or other instructions and reports directly to the Management Board. The Data Protection Officer is responsible for new employee induction, conducting training, and providing updates concerning developments in data protection.

Consumer protection requirements do not apply to DG HYP due to the nature of the bank’s product portfolio and the bank’s client target groups. As we do not offer products in the traditional sense, we do not engage in advertising ac-tivities that could be defined as product marketing.

3 Data Protection: p. 23



FINANCING SUSTAINABLE BUILDINGS

2015 was another year of flagship projects in sustainable construction that DG HYP supported through a

financing. One of these projects was EUREF Campus, centred around the famous gasometer in Berlin, where

we financed another new office building. The "intelligent city of the future" contains only buildings that pro-

duce a CO2-neutral form of energy that already meets the federal government’s climate protection targets

for 2050. DG HYP had already financed a EUREF Campus property in 2014, and has been supporting the

development of the project as a whole.

3 www.euref.de

DG HYP also provided a real estate fund catering exclusively to the needs of institutional investors with the

acquisition financing for the “Leopold 250” office building in Munich. The six-storey building with its large

inner courtyard and three rooftop terraces was certified “Gold” by the German Sustainable Building Council

(Deutsche Gesellschaft für Nachhaltiges Bauen e.V. – “DGNB”). With bright offices of three metres height

and automated ventilation, it meets the high demands of a state-of-the-art working environment.

Also in 2015, we took over the long-term financing for the glass office building “Berliner Bogen” in the

Hamburg quarter “City Süd”, that had been certified “Silver” by DGNB.

The property, with an exceptional architecture, is designed as “house within a house”. A glass shell of para-

bolic shape encompasses the inner, massive core of the building. Inside, there are six winter gardens, each

shaped like a trapezium. The space between glass shell and inner house creates natural ventilation, a healthy

indoor climate and makes sure that energy consumption is low. Further, the thermal storage capacity of

concrete slabs is used to heat and cool the offices, in line with the green climate concept of the building.




30

DG HYP‘s Christmas party for children Summer party in DG HYP‘s courtyard

Staff members at the relay race organised by daily newspaper Hamburger Morgenpost

EMPLOYEES SOCIAL RESPONSIBILITY IS THE HEART OF OUR BASIC CULTURE

DG HYP‘s Christmas party for children Summer party in DG HYP‘s courtyard

Staff members at the relay race organised by daily newspaper Hamburger Morgenpost

EMPLOYEES SOCIAL RESPONSIBILITY IS THE HEART OF OUR BASIC CULTURE



Responsible Human Resources ActivitiesMotivated and skilled employees are the face of our com-pany, and the be-all and end-all of upright, client-oriented and economically successful business activities. It is not only for ethical and legal reasons that we provide a working en-vironment in which everyone is treated with respect, open-ness and fairness. It is also because with such an environ-ment we lay the groundwork for long-term entrepreneurial success, and foster sustainable commitment.

We purse a responsible human resources policy, one that aims to fulfil our employees’ needs, whilst meeting eco-nomic requirements. We offer our staff performance-based remuneration, flexible working hours without a set schedule, and a family-conscious corporate culture. Our attractive offer is complemented by extensive continu-ing professional development offers, social benefits, plus comprehensive occupational health management. We also

place great emphasis on a trusting cooperation with the works council, as evidenced by joint projects – for example, in the realm of promoting women in business, or health management.

Demographic change and competition for specialists and executives will present a major challenge in the years ahead. Owing to this, recruiting female potentials for such roles has become a focal point. An ageing working population and a looming shortage of skilled labour present the bank with the challenge of retaining more experienced staff long-er and fostering their commitment, while also increasing our attractiveness as an employer for potential employees. We aim to future-proof our human resources management with an approach that reflects the needs of different stages in life, strengthening our reputation as an employer and our competitiveness.

0.2 %

below 20

5.2 %

20 to 29 years 30 to 39 years

19.7 %

40 to 49 years

36.7 % 32.3 %

50 to 59 years 60 years or older

5.9 %

EMPLOYEE AGE STRUCTURE


Corporate Culture and Management PrinciplesOur executives are responsible for upholding a corporate culture that motivates, strengthens and creates a stable at-mosphere for our staff to work in. Against the background of our guiding principles and core values, in 2012 our ex-ecutives jointly developed management guidelines which describe the type of management culture the bank is striv-ing to achieve. These guidelines govern the way we treat each other in our daily work.

In 2013, we developed a corresponding manager develop-ment programme, which we continued in the year under review. The programme aims to improve the management behaviour experience in relation to the management guide-lines, and to support managers in implementing them. It comprises seminars, workshop and coaching formats, as well as individual measures.

3 Our Values and Guiding Principles: p. 9

KEY BENEFITS AT A GLANCE

PERFORMANCE-BASED REMUNERATION

FLEXIBLE WORKING HOURS WITHOUT A SET SCHEDULE

VARIOUS FLEX-TIME MODELS

EMPOWERING THE NEXT GENERATION

EXTENSIVE CPD OFFERS

EXTENDED SOCIAL BENEFITS

POSITIVE, FAMILY-FRIENDLY WORK ENVIRONMENT

COMPREHENSIVE OCCUPATIONAL HEALTH MANAGEMENT



Employee Survey: Dialogue and Feedback In order to establish a dialogue with our employees and re-ceive feedback on the working atmosphere and the bank’s development, we regularly organise employee surveys. The most recent survey was conducted online, in 2014, and its findings show above-average employee satisfaction and a high level of organisational identification. In particular, em-ployees value fair working conditions, independent work ethic, good teamwork, and a positive, personal tone. The survey also showed that DG HYP’s employees back the bank’s solid and reliable business model.

The survey also identified potential areas for improvement that we aim to unlock through our “Develop together, change together” initiative, which began in 2015. This ini-tiative focuses on three issues raised during the employee survey and that we need to tackle: cooperation between teams, change management, and personal development prospects. In ten workshops, with more than 100 partici-pants overall, including all executives, we got to the core. Employees identified concrete scope for improvement with regard to the speed of change processes, and the handling of conflicts. With respect to personal development pros-pects, they said they would like to see more opportunity for taking on more responsibility and more challenging tasks, and we will intensify the dialogue between executives and employees accordingly. Concrete action on the survey’s re-sults was already taken during the period under review: we expanded our offering for continuing professional develop-ment (see below). Further measures, originated during the course of the workshops, will be taken in 2016.

Training and Continuing Professional DevelopmentDG HYP aims to maintain the professional and personal expertise of its staff and on promoting their potential, not least because the job requirements in our industry are changing rapidly. We offer a broad range of training and continuing professional development (CPD) options, com-prising in-house seminars, departmental training, team-

building measures, workshops, language classes and IT training, and continuously adapt this range to meet current requirements, for example with regards to regulation. Our employees may also attend external seminars and visit other companies.

Annual employee discussions help us determine the kind of training our employees need. In the same interval, we conduct development discussions with our managers, in which we take a look at the individual development of each employee, and also at the development of the team and at trends each department has to prepare for – partly through further qualification.

During the year under review, DG HYP’s employees com-pleted 3.4 training days on average (2014: 2.8). As a con-sequence of the 2014 employee survey, we adjusted our CPD programme and therefore temporarily offered fewer seminars. At 80 per cent, most staff members participated in at least one training measure during 2015. Demand fo-cused on professional development measures in particular, but personal development courses focusing on leadership, team spirit and cooperation, and personality issues were also in demand – as were in-house language courses.

In line with our “Develop together, change together” initia-tive, we included options on change management, resolv-ing conflict situations and taking responsibility for your own development. In the second half of the year, we launched an executive training on “Transformational Leadership” to further motivate our employees to be proactive and sup-port them in their individual development in the best way possible.

Further to existing measures, DG HYP plans to expand its CPD offering towards age-appropriate learning. Against the background of demographic change, it is our goal to increase interest in training measures and benefit from the experience and knowledge of older employees.



DG HYP Real Estate AcademyA fixture in our CPD programme is the DG HYP Real Estate Academy, which we established in 2010 in cooperation with the International Real Estate Business School (IRE|BS) of the University of Regensburg. In three condensed modules, IRE|BS professors provide a substantiated introduction into the whole spectrum of real estate. Approximately 20 mem-bers of staff work through the demanding curriculum of the Academy every year, making for more than 60 graduated DG HYP employees so far. During the current fourth year, which began in autumn 2015, we were joined by seven Volksbanken Raiffeisenbanken colleagues for the first time.

3 CPD for women: p. 36

Empowering the Next GenerationOwing to demographic change and growing competition for specialists and executives, the attraction of the employer has moved to the forefront of strategic human resources activities. DG HYP decided to take early action against the shortage of skilled young talent, and in 2010 developed an 18-month trainee programme, offering vocational training

for qualified university graduates. 2015 was the pro-gramme’s fourth year. Five trainees were enrolled, four of whom are working in Commercial Real Estate Finance, and one in Treasury. Our career-promoting trainee programme was recognised – again – by “ABSOLVENTA”, a leading employment website for graduates, during the year under review with their quality seal.

Dual-Study Programme In addition to our trainee programme, we also offer a three-year dual study programme, leading to a Bachelor of Arts degree in Banking & Finance – a second pillar to attract young talent. This dual-study programme consists of alternating intensive practical phases in different depart-ments of the bank, and theoretical studies at the vocation-al academy for the banking industry (Berufsakademie für Bankwirtschaft) in Hanover. After two and a half years, par-ticipants also have the opportunity within the framework of their studies to take the Chamber of Industry and Com-merce (IHK) examination. The year under review marked the second year of this dual-study programme, with two students.

Training days Training costs

3.7 days

€ 1,805

2.8 days

€ 1,457

2013

2014

3.4 days

€ 1,504

2015

TRAINING DAYS AND COSTS PER EMPLOYEE



InternshipsStudents and pupils may also get to know DG HYP through internships, student clerkships or their academic (thesis) work. When designing such projects, we adhere to the Fair Company Codex, a voluntary self-commitment we made in 2014 and for which we were awarded the corresponding seal.

To help integrate refugees into German society, DG HYP decided in early 2016 to offer two internships each year over the next two years to refugees. This will enable these interns to get to know working life in Germany, and many DG HYP colleagues have voiced their willingness to support this project as mentors.

Equal OpportunityEqual opportunity and anti-discrimination are cornerstones of our corporate policy and our human resources manage-ment. We treat all employees equally, regardless of their heritage, skin colour, religion, gender, age, nationality, sexual orientation, gender identification, marital status or

degree of disability. Our employees receive regular training on the German General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz). We value the diversity of our employees and therefore decided to sign the German Char-ter of Diversity (Charta der Vielfalt) in 2012. We are bound by these principles – also when talking salaries.

Our corporate culture promotes integration: as such, se-verely disabled members of staff are an important part of our workforce. In 2015, 4.7 per cent of our employees were severely disabled (2014: 4.0 per cent). These employees, to-gether with their interests and concerns, have dedicated representatives.

3 Performance-Based Remuneration: p. 38 et seq.

1. Fair Companies offer internships for students; the goal of these intern-ships is to provide professional orientation and guidance.

2. At Fair Companies, the tasks and goals of interns are clearly outlined, and all interns have a fixed contact in the company.

3. Fair Companies employ interns for a sensible period of time.

4. Fair Companies do not fob off graduates applying for a job with an in-ternship.

5. Fair Companies pay their interns an adequate allowance.

6. Fair Companies provide transparency on tasks, contacts and the goals of the internship as well as on the Fair Company Codex.

RULES OF FAIR COMPANY CODEx



Promoting Women in BusinessResearch has shown that mixed executive teams are more successful. Women bring specific qualities to the team, most notably communication skills. We see women in exec-utive positions as playing a major role for the future of our bank, and promote them with a strategy that starts with the grassroots and, at the same time, raises awareness with the management. To help women advance in business, we fleshed out the related training offers during the year under review, adding specific in-house seminars targeting female employees, as well as recommending external seminars and cooperations with womens’ networks within the real estate sector. Strong interest for this topic within the bank was evident, judging from the proportional attendance of these events by female colleagues.

The Act on Equal Participation of Women and Men in Ex-ecutive Positions in the Private and the Public Sector (Gesetz für die gleichberechtigte Teilhabe von Frauen und Män-nern an Führungspositionen in der Privatwirtschaft und im öffentlichen Dienst) came into effect on 1 May 2015, re-

quiring us to determine a gender quota for the Supervisory Board, the Management Board, as well as the tier one and tier two management levels below the Management Board. Against this background, in accordance with section 111 (5) of the AktG, on 19 June 2015 DG HYP’s Supervisory Board set a target quota of 22 per cent for the share of women on the Supervisory Board, and a target quota of zero per cent for the share of women on the Management Board. In accordance with section 76 (4) of the AktG, on 2 June 2015 the Management Board of DG HYP agreed upon a target quota of 9 per cent for the share of women on the first management level below the Management Board (B1), and on a target quota of 13% for the share of women on the second management level below the Management Board (B2). The target date for implementation of all these quotas is 30 June 2017. After this date, new targets for the next five-year horizon will be fixed.

At the end of 2015, 40.5 per cent of our staff were female (2014: 41.0). In executive positions, the share of women was 10.3 per cent (2014: 10.2 per cent).

In 2013 ABSOLVENTA, one of the largest German employment websites for graduates and young professionals, awarded us their “career-promoting and fair trainee programme” seal.

In 2013, the Hertie Foundation awarded its „audit beruf undfamilie“ certifi-cate for our sustainable, family-friendly Human Resources policies, recognising our efforts in helping employees balance the demands of work and family and establishing a family-conscious corporate culture.



Work/Family BalanceAchieving a proper work/life balance can be a challenge, especially where there are children to take care of or family members to nurse. With a broad range of family-oriented measures, we aim to make life easier for our staff, and rep-resent a corporate culture that reconciles family needs with career planning. This is the high standard that we have set ourselves. Together with our employees, we are always in search of individual solutions to personal matters. In recog-nition of our family-oriented human resources policy, the non-profit Hertie Foundation awarded us the “audit beruf-undfamilie“ certificate in 2013.

In addition to flexible working hours with time-savings ac-counts, various flex-time models and occasional mobile working, we offer professional counselling and expert sup-port for childcare and care of dependent relatives through cooperation agreements with two employee assistance or-ganisations, pme Familienservice and Deutscher Pflegering. External experts are also there to help with personal emer-gencies or problems of all kinds. There is also a parent-child

office available at short notice, and we offer emergency childcare where necessary.

All employees on parental leave are welcome to return to DG HYP. To better bridge the time taken out for fam-ily leave, and to make it easier to return to work, we de-veloped a three-phase model in 2015, bundling and sys-temising existing success factors. The model provides for well-coordinated planning prior to the leave, stay-in-touch measures such as a parental leave newsletter, invitations to office parties during the leave, as well as for meetings and talks with executives in good time prior to the return. Managers are prepared for these and other measures with a seminar on “Family friendliness as a factor to success”, included in our manager development programme.

The measures we wanted to take following our most recent certification (2013) were implemented by 2015. For 2016, we plan to refresh our “audit berufundfamilie” certificate, awarded for a working environment that acknowledges caretaking responsibilities and the importance of family life.

USE OF FLExIBLE WORKING HOURS

Employees (%) 2015* 2014 2013

Flexible hours 100.0 97.6 97.5

Full time 81.4 84.1 85.9

Part time 18.5 15.9 14.1

Occasional mobile working 48.8 42.7 35.5

Sabbatical 0.7 0.2 0.2

Partial retirement 1.5 1.5 2.0

Parental leave 1.5 2.4 2.3

*DG HYP‘s total workforce



Performance-Based Remuneration Our remuneration strategy observes our business and risk strategies, whilst also adequately and transparently recog-nising the achievements of our employees. Remuneration is based only upon qualifications and performance; gender-related aspects are not taken into account. A fixed base sal-ary enables our employees to plan for the future, and gives them a regular income upon which they can rely. We further honour their achievements by paying a performance-based bonus once a year. In addition to commercial success, we honour individual and team achievements. The variable component is determined based on the individual’s per-formance assessment, or the achievement of agreed targets pursuant to the provisions in the employer/works council agreement (Betriebsvereinbarung) on variable remunera-tion.

267 members of staff were non-tariff employees as at 31 December 2015, 192 were tariff employees, eight received a trainee salary or other forms of remuneration, and ten were temporary workers.

Remuneration of the Management Board The Management Board is remunerated in accordance with legal and regulatory requirements. The Supervisory Board is

responsible for the Managing Directors’ remuneration and conducts regular reviews, in particular with regard to ap-propriateness and changes necessary to comply with new regulatory requirements. The remuneration is comprised of a fixed and a variable component. Payment of the variable component is dependent on a sustainable development of the bank and linked to enterprise value. Accordingly, and pursuant to the German Regulation on Remuneration in Financial Institutions (Institutsvergütungsverordnung – “In-stitutsVergV”), as amended in December 2013, the variable remuneration of the Management Board is calculated on the basis of multi-year criteria, and risk-related indicators are taken into account.

3 Remuneration Oversight Committee: p. 21

Remuneration of Risk Takers Employees whose professional activities may have a mate-rial impact on the bank’s risk profile are classified as risk takers. Where the remuneration for the 43 risk takers at DG HYP (including Managing Directors) exceeds a certain limit, provisions in the employer/works council agreement (Be-triebsvereinbarung) on retention, payment and entitlement conditions apply. 80 per cent of the variable remuneration component is retained for up to four years following deter-

SOCIAL BENEFITS

On top of a performance-based remuneration, we offer comprehensive social benefits for our employees to enhance their social protection and improve their work/life balance. Our benefits include corporate retire-ment provisioning, childcare support, a transit card (“job ticket”) and transit allowance for public transport, group accident insurance, a corporate sports programme, anniversary bonuses, a canteen, and financial support for next of kin. DG HYP also contributes to employees’ capital-building payment schemes.

In the year under review, compulsory social security contributions, expenses for pensions and other employee benefits (German Commercial Code – “HGB”) amounted to € 6 million, of which € 0.8 million (2014:€ 2.9 million) was pension expenses and € 5.2 million (2014: € 4.9 million) other.



mination. During this time, a minimum of 50 per cent of the variable remuneration depends upon DG HYP’s sustainable performance.

Occupational Health Management and Safety As we take our responsibility as an employer seriously, we aim to create a safe working environment by not only elimi-nating factors that may trigger or worsen conditions, but also taking preventive measures to preserve and improve employee health – an important cause also in economic as-pects as this means safeguarding the bank’s ability to per-form.

Occupational Health Management Our comprehensive occupational health management con-tributes to the performance, health and commitment of our staff. The measures on offer were expanded and developed further during the year under review. The focus of our health management activities during 2015 was on assessing the threat of mental stress at the workplace. The objective was to identify (using an online questionnaire), assess, and miti-gate any elements in the design of work arrangements which might have a negative impact. Over 76 per cent of employees participated in the survey. Results reports have been elabo-

rated for every group, on the basis of which managers and team members can develop concrete improvement ideas. The results of this teamwork are scheduled to be analysed by the end of September 2016; corresponding measures can then be taken.

Our occupational health management also comprises a ver-satile range of in-house sports, healthy meals in the staff restaurant, advice from the company doctor, regular health checks and seminars to promote employee health. Addition-ally, we started to equip workstations with height-adjustable desks in 2015.

During the year, 149 employees took up our offer of corpo-rate sports and fitness programmes, such as complete body training, kick-boxing and running (2014: 149). In the sum-mer months, we took part in the “Cycle to work” initiative, started by the German Cycling Club ADFC and AOK health insurer. Around 40 colleagues participated, cycling almost 10,000 kilometres between 1 June and 31 August 2015, alone or in teams. DG HYP running teams participated in sporting events such as the HSH Nordbank Run, a race for a good cause through Hamburg’s HafenCity, and the MOPO relay race in Hamburg’s city park.

Years

201513.8

201312.9

201413.3

AVERAGE LENGTH OF COMPANY SERVICE



The average illness rate 2015 was at 3.6 per cent, slightly exceeding the previous year’s value (2014: 3.4 per cent), but still at an acceptable level. The rise was caused by an increase in long-term illness not related to the working environment. Last but not least, we not only invest in preventive occupa-tional health measures, but we also support employees re-turning after longer periods of illness, via an occupational re-integration programme.

Occupational Safety In accordance with the statutory provisions and require-ments for occupational and fire safety, all employees receive safety training when they join us. Occupational safety spe-cialists conduct these trainings. We also carry out regular workplace inspections, safety instructions and measures to raise awareness for occupational safety issues.

As in the previous years, there were no work-related fatali-ties in 2015. The average annual rate of work and commut-ing accidents at DG HYP was 2.4 per cent in 2015 (2014: 2.0 per cent).

PROMOTION OF HEALTH

Exercise/company sports offers

Lectures, information material

Healthy diets

Relaxation/stress management

Vaccination campaigns

Healthcare action day

Mobile massage service

OCCUPATIONAL HEALTH AND SAFETY

Risk assessment

Occupational medicine/health check-ups

Workplace visits/advice on workplace ergonomics

Information and advice

OCCUPATIONAL RE-INTEGRATION MANAGEMENT

Re-integration following longer periods of illness or other absence

Personal discussi-ons with returning employees

CATERING

Healthy meals in the in-house restaurant and café

Workplace nutrition

PERSONNEL DEVELOPMENT

Occupational health seminars for managers

CPD measures/seminars on

healthcare, stress, psychological pressure

HOLISTIC COMPANY HEALTH MANAGEMENT AT DG HYP



2015 2014 2013

Employees (number) 459 454 440Temporary employees 10 9 18 Non-tariff employees 449 445 422

Expenses for compulsory social security contributions (€ mn) Wages and salaries 39.9 38.0 36.8Company pension schemes 0.8 2.9 1.5Other social security contributions 5.2 4.9 4.6 Percentage of women Total workforce 40.5 41.0 40.7Executive positions 10.3 10.2 10.2

Average age 46.0 45.7 45.4

People with disabilities (%) 4.7 4.0 3.4

Fluctuation (%) 3.7 0.9 3.1

Illness rate (%) 3.6 3.3 3.2

Workforce by type of employment (%) Non-tariff employees 58.2 56.4 53.2Tariff employees 41.8 43.6 45.2Other employees – 1.5 1.6with at least 15 vacation days* 95.0 95.9 95.2with 23 vacation days or more 91.7 93.2 90.7with 30 vacation days 86.5 84.7 85.9with the option to take special leave 100.0 100.0 100.0with the option to work part time 100.0 100.0 100.0with company pensions 97.8 98.0 97.7

represented in the Works Council 97.6 97.6 97.5

*Full-time employees have a claim on 30 days paid leave per year; for part-time-employees, this claim is calculated on a pro-rata basis, in line with the number of working days per week.

STAFFING INDICATORS




42

CORPORATE ENVIRONMENTALPROTECTION ECOLOGICAL RESPONSIBILITY AS A

COMPONENT OF COMPANY POLICY

DG HYP‘s new cooling system

New taps offering high potential water savingsin DG HYP

DG HYP‘s green inner courtyard



Environmental and Climate Strategy A sound and stable environment is the basis of human exist-ence; it’s also a basic requirement for every type of business activity. Systematic environmental and climate protection take a major role in our day-to-day work, with our focus being on those areas where we have a direct influence. Our environmental management focuses on optimising the use of energy and resources at the bank, and on using renew-able energy sources to consistently reduce our operational carbon footprint. Facility management, in particular, holds very specific potential for minimising negative contribu-tions. We also seek to reduce mobility-related emissions such as those resulting from business travel. An environ-mentally friendly supply chain of products and services is also part of our sustainable corporate policy.

In 2014, together with the other units represented in DZ BANK Group’s Corporate Responsibility Committee (CRC), we developed an environmental and climate strategy. With this Group-wide approach, we want to set joint standards for a convincing environmental policy, for an efficient en-vironmental organisation and for environmental processes that ensure a conclusive collection of data, elicitation of indicators as well as the continuous development of meas-ures and goals. In order to exchange knowhow and ex-pertise, and improve strategy, the experts of a dedicated “knowledge centre” meet regularly. In addition, we are currently working on our own climate strategy. By 2020 we will have reduced our CO

2 emissions by 15 per cent com-pared to 2012. The first version of a working paper, to be presented to the Management Board, is currently being drafted.

Organisation and ManagementTo further advance environmental protection at DG HYP and keep track of the effects of our business activities for the environment, we systematically record and analyse our resources consumption. This makes it easy to identify where action needs to be taken, and where there is room for im-provement. In accordance with our environmental policy, we derive environmental targets and fix the measures we need to take to meet them. These efforts are coordinated by the Environmental Officer, who is responsible for further advancing our environmental management system. The Environmental Officer is supported by a team of two coor-dinators, who ensure that the departments are included in the process. The departments formally assume responsibility for certain environmental topics and successful implemen-tation of our measures.

3 Sustainability Programme, Ecological Responsibility: p. 59

Engaging Our EmployeesFor environmental management to bear fruit, it needs to be supported by all colleagues. This is why we place great importance on engaging our employees and keep them updated about goals and results in the realm of environ-mental and resource protection. We want to motivate our employees and make them see environmental protection as their own cause, both in their professional and private lives. We regularly hold theme weeks, during which staff learn interesting, amusing and useful facts about energy, water and waste. The CLUB OF ROME provides support in this respect; during our 2014 event week, representatives devoted a whole day to speaking with our employees about the recycling economy.


Greenhouse Gas Emissions The calculation of greenhouse gas emissions (CO2 emis-sions) is based on the VfU indicator system (Association for Environmental Management and Sustainability in Financial Institutions). In accordance with the Greenhouse Gas Proto-col (GHG Protocol), we differentiate between the following types of emissions in our reporting:

• Scope 1: Direct emissions.

• Scope 2: Since 2015, the GHG Protocol asks for data to be reported in two ways: one based on a so-called location-based method, and one based on a market-based method (“dual reporting”). Pursuant to the VfU

we continue to allocate scope 2 emissions based on supplier- and product-specific emission factors (market-based method).

• Scope 3: Other indirect emissions, e.g. related to trans-portation and logistics, the use of products and services, supply and disposal for our service providers, and busi-ness travel.

This system allows us to identify the main sources of emis-sions within the bank, calculate our carbon footprint, and take dedicated measures to increase energy efficiency, save energy, and decrease greenhouse gas emissions.



CO2 EMISSIONS

Unit 20151 20141 20131

Total electricity CO2 emissions kilogrammes (kg) 11,234 19,492 19,266 Specific electricity CO2 emissions kg/FTE 34 59 61 Total heat CO2 emissions kilogrammes (kg) 464,014 422,893 507,862 Specific heat CO2 emissions kg/FTE 1,384 1,276 1,620Total water CO2 emissions kilogrammes (kg) 3,789 4,286 4,646Specific water CO2 emissions kg/FTE 11 13 15Total paper CO2 emissions kilogrammes (kg) 23,294 24,058 25,321Specific paper CO2 emissions kg/FTE 69 73 81Total waste CO2 emissions kilogrammes (kg) 898 1,768 3,131Specific waste CO2 emissions kg/FTE 3 5 10Total transport CO2 emissions 2, 3 kilogrammes (kg) 477,4324 367,755 405,249Specific transport CO2 emissions kg/FTE 1,0404 810 921

Total CO2 emissions kilogrammes (kg) 980,6524 840,251 965,474Total specific CO2 emissions kg/FTE 2,9254 2,535 3,081

1 78 per cent coverage per full-time employee (FTE); part-time positions are added up to a 100 per cent basis. Including permanent and temporary employees (excluding Management Board, interns, trainees, working students and externals). We adjusted the deduction of the CO2 consumption and have reflected the VfU conversion tables in all our ratios since 2013; they therefore include preceding and following processes as well. While this allowed us to significantly improve the quality of the conversion, the CO2 ratios have augmented. 2 100 per cent coverage per full-time employee (FTE). 3 including private vehicle usage. 4 Following a change of the leasing company in 2015, we are now able to indicate the real annual mileage of vehicles. CO2 indications therefore are more accurate than in previous years; however, they cannot be compared with those of previous periods.

Total

Kg. 000‘s

Specifi c

Kg. 000‘s/FTE

2015

980,652

2013 2014

965,474 840,251

2015

2,925

2013 2014

3,081 2,535

4

3

2

1

0

1,500

1,000

500

0



ELECTRICITY AND HEAT CONSUMPTION

Unit 2015* 2014* 2013*

Electricity consumption Total electricity consumption kilowatt hours (kWh) 1,649,690 1,651,848 1,632,596 of which sustainable hydroelectricity kilowatt hours (kWh) 1,649,690 1,651,848 1,632,596Specific electricity consumption kWh/FTE 4,920 4,980 5,209

Heat consumption (natural gas) Total heat consumption kilowatt hours (kWh) 1,811,782 1,638,230 1,967,392 Specific heat consumption kWh/FTE 5,403 4,939 6,277

*78 per cent coverage per full-time employee (FTE); part-time positions are added up to a 100 per cent basis. Including permanent and temporary employees (excluding Management Board, interns, trainees, working students and externals).

Electricity and Heat Consumption Since 2013, DG HYP has sourced 100 per cent of its elec-tricity from renewable energy sources. To be precise, the bank consumes certified hydroelectricity only. During the year under review, electricity consumption amounted to 1,649,690 kWh, and was slightly down on the previous year. On FTE basis, electricity consumption decreased by 1 per cent.

We have taken a number of measures to further reduce our electricity consumption. Apart from raising awareness with our employees, for example concerning the avoidance of standby power loads, enhancing energy efficiency is a major topic. We are increasingly combining energy-efficient LED with movement-sensitive lighting and demand-based lighting controls (e.g. for timing and intensity).

The heat consumed by DG HYP in Hamburg is gener-ated with natural gas. Absolute consumption rose by ap-

proximately 11 per cent on the previous year in 2015 to 1,811,782 kWh.

In the year under review, we began a comprehensive re-furbishment of the façade covering our Hamburg offices, and will also modernise the central heating. We believe that these activities will yield improvements in energy efficiency. Further, by installing a cogeneration unit and a photovoltaic system we will be able to generate part of the energy we use ourselves. Parts of the air conditioning and air handling systems will also be upgraded to state-of-the-art technolo-gies in energy consumption and air quality control. As in other buildings, air scrubbers will be equipped with germi-cidal UV light waves, and water purification systems will be added, making chemical cleaning redundant. We aspire to be certified “Silver” by the German Sustainable Building Council (Deutsche Gesellschaft für Nachhaltiges Bauen e.V. – “DGNB”) following completion of these measures.



WATER CONSUMPTION

Unit 2015* 2014* 2013*

Total water consumption cubic metres (m³) 5,390 5.,722 6,203 Specific water consumption m³/FTE 16 17 20


Water Consumption DG HYP sources water from the public utility for the Ham-burg region, HAMBURG WASSER. Total water consump-tion during the year under review was 5,390 cubic metres (2014: 5,722 cubic metres). Specific water consumption per employee decreased from 17 to 16 cubic meters. In spite of additional showers being installed in the corporate sports facilities and the new table water offering in our in-house canteen, the positive trend registered in 2014 continued. This progress was achieved with various individual measures such as the updating of sanitary facilities, installing flow rate reducers in the mixer taps, and optimising humidifica-tion in air conditioners.

Paper ConsumptionAmongst the consumables, printer and copier paper ac-count for the largest share in terms of volume. In December 2014, we switched all printer and copier paper to recycled, Blue Angel certified paper. For marketing material and pub-lications, we have been using paper certified by the Forest Stewardship Council (FSC) only, since 2015.

Absolute paper consumption rose 1.5 per cent on the previ-ous year. This temporary rise can be attributed to a switch from folded paper towels to hard roll towels. Printer and copier paper consumption decreased in 2015 by more than 200 kilogrammes.



PAPER CONSUMPTION

Unit 2015* 2014* 2013*

Printer and Copier Paper Consumption Total paper consumption** kilogrammes (kg) 11,092 11,314 10,933 Specific paper consumption kg/FTE 34 34 35 Proportion of FSC certified paper % 22 27 32Proportion of recycled paper % 76 5 4 Proportion of paper used that was produced using elemental chlorine-free bleach % 0 20 61Proportion of paper used that was produced using chlorine-free bleach % 2 75 35

Printed material Total paper consumption kilogrammes (kg) 5,436 5,397 6,578 Specific paper consumption kg/FTE 16 16 21 Proportion of FSC certified paper % 100 35 33Proportion of paper used that was produced using elemental chlorine-free bleach % 0 65 67 Proportion of paper used that was produced using chlorine-free bleach % 0 35 33

Hygienic paper consumption Total paper consumption kilogrammes (kg) 3,783 3,290 3,540 Specific paper consumption kg/FTE 11 10 11 Proportion of paper used that was produced using elemental chlorine-free bleach % 86 86 87 Proportion of paper used that was produced using chlorine-free bleach % 14 14 13


**Changes in data collection have resulted in different data than published with the status report 2013 (paper consumption incl. envelopes 2013-2014).

2015 2015

Total

20,311

Specifi c

61

Kg. 000‘s

2013 2014

67 60

2013 2014

21,051 20,001

25

20

15

10

5

0

80

60

40

20

0

Kg./FTE



MobilityBusiness-related air travel increased in 2015, mainly due to a major DZ BANK project in Frankfurt. We are currently evaluating whether to compensate for emissions caused by air travel with climate protection projects.

To cut down on business-related travel, we are raising em-ployee awareness and increasingly making use of video and teleconferences. We are further encouraging our employ-ees to use low-emission public transport with transit cards (Jobticket) and transit allowances. In the year under review, 320 employees took advantage of these financial incen-tives (2014: 293). Complementary bicycle parking places are available to employees, and also to commercial ten-ants of our cooperative companies, at our headquarters in Hamburg. We have more than 65 spaces for bicycles, 30 of which are in the underground garage. As demand is there, we will further expand this offer.

We set great store by a fuel-efficient and low-emission vehicle fleet. Following a change of the leasing company in 2015, we are now able to indicate the real annual mileage of our cars. CO2 indications therefore are more accurate than in previous years; however, they cannot be compared with previous periods. From 2016 onwards, we will again

be able to comment on the development of emissions. We are currently evaluating the possibility of offering our employees with a company car training on fuel-efficient driving techniques, in cooperation with our leasing partner. In addition, we ordered a BMW i3 electric car in 2015 that has been in use for business-related travel in Hamburg since early 2016.

Waste We try to avoid waste wherever we can. Where this princi-ple cannot be applied and we generate waste, it is reused and recycled. All of our waste is disposed of by an external contractor with most of it – 88 per cent (2014: 87 per cent) – being recycled. 10 per cent of waste is used to replace pri-mary energy sources, and is prepared as substitute fuel for thermal energy generation, thus contributing to the saving of resources, and to reduce CO

2 emissions. Only 2 per cent are not recyclable.

We managed to reduce our waste by 27 per cent in 2015, compared with the previous year. Transparency of waste data has increased considerably over the past years, as que-ries have become more differentiated and data suppliers are more involved.

WORK-RELATED TRAVEL

Unit 2015* 2014* 2013*

Total work-related travel kilometres 2,561,863 2,400,205 2,639,415 Specific work-related travel kilometres/FTE 5,581 5,287 5,999 Share of travel by train % 27 27 22 Share of air travel % 22 21 28• < 500km % 84 43 41• > 500km % 16 57 59

For DG HYP’s work-related travel by train, it is worth noting that the German railway company Deutsche Bahn uses sustainable energy only, making this form of travel climate-neutral since 1 April 2013.

*100 per cent coverage per full-time employee (FTE)



WASTE

Unit 2015* 2014* 2013

Non-hazardous waste Total paper (excluding confidential paper) kilogrammes (kg) 12,279 13,700 14,498 Specific paper (excluding confidential paper) kg/FTE 37 41 46 Total confidential paper kilogrammes (kg) 12,658 10,044 8,006Specific confidential paper kg/FTE 38 30 26Total mixed packaging kilogrammes (kg) 2,790 2,781 3,806Specific mixed packaging kg/FTE 8 8 12Total building site waste from modernisation kilogrammes (kg) 47,577 86,027 226,275Specific building site waste from modernisation kg/FTE 142 259 722Total commercial waste kilogrammes (kg) 48,887 57,906 58,651Specific commercial waste kg/FTE 146 175 187

Total non-hazardous waste kilogrammes (kg) 124,191 170,458 311,236Specific non-hazardous waste kg/FTE 370 514 993

Hazardous waste Total toner waste kilogrammes (kg) 175 181 264 Specific toner waste kg/FTE 0.5 0.5 1 Total electronic machinery waste kilogrammes (kg)) 1,127 1,684 742 Specific electronic machinery waste kg/FTE 4 5 2 Total lighting waste kilogrammes (kg) 237 236 173 Specific lighting waste kg/FTE 1 1 1

Total hazardous waste kilogrammes (kg) 1,539 2,101 1,179Specific hazardous waste kg/FTE 5 6 4


Batteries, electronic scrap, wires, aluminium and copper waste are disposed of individually. The contractor reimburs-es these materials in accordance with market standards, and credit is applied against disposal costs.

Banking activities mainly generate paper waste. Confiden-tial paper waste is placed in centrally located data security bins, and then disposed of in accordance with the German Data Protection Act (Bundesdatenschutzgesetz). Our em-ployees are also encouraged to consistently sort their waste, and the kitchens are equipped with bins for residual waste,

glass and recyclable plastics. Since the end of 2014, all offices are equipped with an additional dustbin to facilitate the segregation of wet or damp waste and dry paper. The plastic bin liners used in the cleaning company’s collection areas were replaced by environmentally friendly jute sacks.

Also since the end of 2014, we joined an initiative to col-lect pens promoted by international recycling and upcycling company TerraCycle: biros, felt pens, and synthetic office utensils are collected and reused.



Environmental Protection Along the Supply ChainWhen selecting suppliers, we abide by DZ BANK Group’s sustainability standards for suppliers. These standards have been an integral part of our procurement process since 2012. Suppliers exceeding a fixed threshold must commit themselves to reduce environmental impact beyond legal minimum requirements, and have organisational structures for a systematic environmental management in place.

We give preference to local suppliers and service providers, meaning they are located close to one of DG HYP’s offices. This results in short transportation routes and helps reduce CO2 emissions. In 2015, we sourced 99 per cent of our products and services from German suppliers (based on our total business volume), 84 per cent thereof were locals (2014: 80 per cent).

As IT is a major influence upon energy consumption and CO2 emissions, we place great importance on improving energy efficiency when procuring new equipment. In 2015, we replaced 150 computers with new, energy-efficient models. In 2014, we switched all printers in the company to Blue Angel certified devices that meet our requirements regarding fine particulates, power consumption and emis-sion. In general and where available, we prefer electronic devices with an environment mark such as Blue Angel or Energy Star.

Climate-Friendly Food Choices Our staff restaurant has long been committed to primarily offering seasonal and regional food. This approach was broadened in 2015, with an even clearer focus on high-quality and regional products, whose origins and produc-tion chains are transparent. We serve “Susländer” pork from Schleswig-Holstein, Germany’s northernmost state, and source beef from a supplier offering meat from re-gional heifers. The same applies to poultry, which is raised in Northern Germany under humane standards, without medicated feeds or feed additives.

Fish is sourced mainly from German catch, and certified with the MSC label, that guarantees sustainable fishing.

Fruit and vegetables mainly come from our region as well, and are offered according to seasonality. Dairy products hail mainly from a small local creamery. In November 2015, we held an info day at our staff restaurant with some of our suppliers. This was a chance for our employees to meet suppliers in person, and ask questions regarding humane husbandry.

Since July 2012 we have been part of the “KlimaTeller” project of the charity GreenFlux e.V.: every Wednesday, in our canteen, we do not offer red meat products, nor any dairy products with fat content above 15%. This is because the production of such foods usually entails application of fertilizers, destruction of rainforests to create pasture land, and significant greenhouse gas emissions emanating from animal digestive processes.

ÖKOLOGISCHE VERANTWORTUNG

UMWELTSCHUTZ ALS TEIL DER UNTERNEHMENSPOLITIK



Staff members at the HSH Nordbank Run, Hamburg DG HYP‘s Management Board plant trees at the „Plant a Gingko tree for Lohsepark“ campaign, an event on the occasion of the ULI Leadership Awards

SOCIAL COMMITMENTBUILDING TRUST THROUGH RESPONSIBLE ACTIONS

DG HYP employees help spruce up the gardens of the Sternenbrücke children’s hospice in Hamburg during our Social Day



Our BeliefsWe, as a company, are part of society and want to promote development and foster the public good in the communi-ties we are active in. And that is what we do – as an em-ployer, a trainer, a client, and a taxpayer, but also through our commitment to society. The cooperative basic values of aiding empowerment, solidarity, partnership and social commitment are the cornerstones of our activities. Together with our staff, we pursue an active programme of social and community duties, and we support a large number of social projects, third sector organisations in our fields, as well as the social involvement of the Volksbanken Raiffeisenbanken cooperative financial network.

Community ServiceDuring the year under review, we again provided financial support to the Hamburg Donor’s Parliament, a grassroots charity fighting homelessness, poverty and loneliness.

We also provided financial support to a large clothing de-pot in Hamburg’s expo centre dedicated to refugees, and encouraged our employees to donate clothes. During our regular Social Day, when we make staff available to engage in social projects as volunteers, 14 employees helped spruce up the rambling gardens of the “Sternenbrücke” children’s hospice in Hamburg.

Our employees’ 2015 Christmas donations – as always, doubled by DG HYP – were given to the Diakonie’s “Mid-night Bus” for the homeless and the “SeniorPartner Diako-nie” project in Hamburg. As in previous years, we decided to refrain from sending Christmas cards for ecological rea-sons. Instead, we supported three projects of SOS Children’s Villages helping children, teenagers and families in need.



Related Field Project SupportThe CLUB OF ROME advocates sustainable development that aligns the needs of today’s and future generations to the limited availability of resources and the limited resilience of ecosystems. Promoting the Club and its mission state-ment is an important cause to us. Since 2013, we have been providing the CLUB OF ROME’s Germany headquarters with facilities at DG HYP House at no charge, with the Club only making a cost contribution. We also provide the organisa-tion with a forum for various client events, and we are an active supporter of the CLUB OF ROME schools network, promoting its expansion. The network currently comprises 15 schools with over 10,000 students. CLUB OF ROME schools advocate innovative learning approaches and en-courage students to think in an international context, fol-lowing the “Think globally, act locally” mantra.

For the third year running, DG HYP was host and finan-cial backer for the annual meeting of the CLUB OF ROME schools. As a company that shares the same values and goals as the CLUB OF ROME schools network, the network recognised us as an educational partner in November 2015.

The employees of DG HYP have been providing aid to the DZ BANK Microfinance fund for many years, and contin-ued to do so in 2015. The Microfinance Fund extends small loans to people in developing countries who have neither access to conventional banks nor funding of their own, mainly to women who are active in trades, crafts, agricul-

ture or food production. With these loans, they are able to build a business, create jobs and independently improve their living situations, in line with the cooperative principle of aiding empowerment. The DZ BANK Microfinance Fund was founded by DZ BANK employees more than ten years ago. In 2012, it was converted into a cooperative with over 250 members, including DG HYP staff.

Together with 15 other companies, DG HYP has been a member of the Real Estate and Leadership Foundation since 2015. The joint goal of the association is to promote science, research and education relating to interdisciplinary and cross-interface leadership issues of the real estate business. Last but not least, in 2015 DG HYP provided two students at HafenCity Universität Hamburg (HCU) with scholarships.

3 www.club-of-rome-schulen.org



Cooperative Charitable SupportOur sponsorship activities include cooperative charitable support. The recipients of DG HYP support include organi-sations promoting or researching the idea of cooperative banks and the cooperative movement, such as the Re-search Institute for Cooperative Studies at the University of Erlangen-Nuremberg, the Förderverein zur Stiftung GIZ e.V. and the Gesellschaft zur Förderung des Instituts für Ge-nossenschaftswesen at Philipps University Marburg/Lahn. Furthermore, DG HYP, DZ BANK and other companies with-in the Volksbanken Raiffeisenbanken cooperative financial network support the Active Citizenship Association (Aktive Bürgerschaft), which advocates civic action, non-profit or-ganisations, and a fair and powerful civic society.

5 CHOCOLATES = 1 TREE

Since 2014, DG HYP has been handing out The Change Chocolate to clients and business partners. The Change Chocolate was initiated by the CLUB OF ROME children’s initiative Plant-for-the-Planet. For every five bars sold, the initiative plants one tree. DG HYP alone has distributed more than 4,000 chocolate bars – that makes over 800 trees, planted all over the world. Clients can look forward to receiving more sweet climate-savers in 2016.




56

SUSTAINABILITY PROGRAMME

Objective Period Measures Status

Sustainability strategy and corporate governance

Expanding the external stakeholder dialogue Ongoing Processing of rating and Objective for 2015 met GRI G4-26 stakeholder enquiries

Analysing rating results and defining departmental responsibilities to unlock optimisation potentials

Sustainable banking business

Adding further sustainability criteria 2021 Defining exclusion criteria in the context Partial objective metto the lending process of our reputational risk strategy

Regularly attending and actively contributing to DZ BANK Group’s “Sustainability and Lending” working group (established in 2015)

Developing a sustainability check list/ a list of criteria for clients and properties

pending/new target being implemented annually/regularly concluded in 2015




Employees

Recruiting, fostering the progress and Ongoing Continuing the trainee and dual Objective for 2015 metretention of talent study programmes

Providing internship and working students vacancies

Preserving and improving employee health Ongoing Regularly: Objective for 2015 met

Health days

Influenza vaccinations

Dedicated initiatives (2015: “Cycle to work”)

Offering seminars to preserve employee health (2015: “Healthy sleep”, etc.)

2016 Reducing mental stress at the workplace

Conducting a threat analysis to assess occupational stress

Concluding and bundling measures from threat analysis to assess occupational stress

2015 Preparing an expert opinion on harmful substances, as a preventive measure

Increasing the share of women at department 2017 Programme to increase the share of women Partial objective met head level to 13% by 30 June 2017 in executive and expert positions

Against the background of demographic change, Ongoing Further strengthening DG HYP’s employer brand Partial objective met increasing employer attractiveness and Continuously evaluating the communicationpreparing the bank channels used

Optimising employer communications

Establishing a single employer brand for DZ BANK Group in the labour market

2016 Further strengthening flexible work models

Developing various full-/part-time and vacation models

Implementing the models




Employees

Expanding the internal stakeholder dialogue Ongoing Further improving employee satisfaction Objective for 2015 met GRI G4-26 Conducting regular employee surveys

Concluding and implementing measures based on survey results

2016 “Develop together, change together” initiative Partial objective met

Analysing critical issues identified in employee survey, in workshops attended by all executives and employees from all departments; groups of executives and employees to be equal in size

Aligning CPD offering with initiative

Discussing the workshop’s results structurally, in all teams; transferring to working environments

Concluding and implementing measures

Improving the compatibility of Ongoing Enshrining and living “Principles of Partial objective met private life and working life a family-conscious corporate culture”

Stay-in-touch programme for absent employees

Expanding informational offer on the intranet and internet

Organising theme week on “family and work life” on a regular basis

Consciously using the “audit berufundfamilie”, awarded for a working environment that acknowledges caretaking responsibilities and the importance of family life, to review progress and develop new measures

While refreshing audit certificate: concluding a new target agreement on optimising the work/family balance





Ecological responsibility

Expanding the recording of, and improving Ongoing Continuously improving data quality of Objective for 2015 met the transparency of environmental data relevant consumption files by installing new and additional data acquisition tools

Expanding consumption monitoring (selectively; upon requirement and findings)

Protecting the environment and reducing 2020 Construction measures (until 2017) in accordance Partial objective met carbon footprint with DGNB sustainability requirements

Reducing CO2 emissions by 15% between Comprehensive façade and heating2012 and 2020 refurbishment at Hamburg headquarters

Goal: DGNB certification “Silver”

Renewing and expanding split air conditioning systems to permit heat recovery, allowing waste heat to be used for example for garage heating

Conserving resources Ongoing Implementing energy saving measures Objective for 2015 met at the Hamburg headquarters:

Switching to energy-efficient lighting

Raising environmental and sustainability awareness Ongoing Integrating sustainability themes Objective for 2015 met into welcome events for new employees

Making the switch to recycled paper 2016 Switching to 100% recycled Partial objective met printer and copier paper in all parts of the bank

Switching envelopes to recycled paper

Switching all printed material to FSC certified paper





Social commitment

Supporting sustainability-promoting institutions Ongoing Supporting CLUB OF ROME Objective for 2015 met Supporting CLUB OF ROME schools

Using the Plant-for-the-Planet initiative’s The Change Chocolate as a giveaway at events

Supporting DZ BANK Microfinance Fund

Expanding corporate citizenship Ongoing Supporting the Hamburg Objective for 2015 met Donor’s Parliament

Commissioning of charity organisations for work, e.g. Rauhe Haus

Doubling employees’ Christmas donations

Avoid sending out Christmas cards – donation to charity instead

Supporting real estate associations such as IMMOEBS e.V.

Supporting cooperative charitable initiatives

Research on cooperative science

Support the Active Citizenship Association (Aktive Bürgerschaft)

Expanding corporate volunteering Ongoing Activities and events: Objective for 2015 met

Cooking for the homeless

Regular Social Day




GRI CONTENT INDEx

The Global Reporting Initiative (GRI) has created a standard for sustainability reporting in order to establish an international basis for comparing sustainability performance between different companies. The report follows the G4 guidelines in its “core” option. The given GRI Content Index comprises the core indicators, and provides references to corresponding pages in the report where the relevant information can be found.

UN GlobalCompact


GRI-Indicator Reference

Strategy and Analysis G4-1 Statement from the most senior decision-maker 4, 5G4-2 Key impacts, risks, and opportunities concerning sustainability 4, 5, 9, 10, 15, 17, 20, 21

Organizational Profile G4-3 Name of the organization Cover, 4, 7, 8, 66G4-4 Primary brands, products, and services 7, 8, 10, 11, 25, 27, AR (p. 11)G4-5 Location of the organization’s headquarters 66G4-6 Countries with significant operations 7, AR (p. 18)G4-7 Nature of ownership and legal form 8, 13, 21, AR (p. 9)G4-8 Markets served 7, 12, 16-19, AR (p. 16, 17)G4-9 Scale of the organization 7, 12, 13, 38, 41G4-10 Employees by employment type, gender and region 36, 38, 41G4-11 Percentage of employees covered by collective bargaining agreements 41G4-12 Description of the supply chain 16, 23, 51, http://dghyp.de/suppliersG4-13 Significant changes during the reporting period 5, 12G4-14 Implementation of the precautionary principle 10, 15, 21, 43, 53, AR (p. 51 ff.) 7G4-15 External initiatives that the organization endorses 2, 10, 15, 23, 26, 35, 43, 44, 54 1-10G4-16 Significant memberships in industry and business associations 18, 19, 25, 54

Identified Material Aspects and Boundaries G4-17 Entities included in the consolidated financial statements 11, 13, 25, AR (p. 10, 17, 31, 68 ff.)G4-18 Process for defining the report content 2, 15, 19G4-19 Material Aspects identified 16, 20G4-20 Aspect Boundaries within the organization 20G4-21 Aspect Boundaries outside the organization 20G4-22 Restatements of informations provided in previous reports 2, 16G4-23 Significant changes in the Scope and Aspect Boundaries 2, 19

Stakeholder Engagement G4-24 Stakeholder groups engaged 16, 17, 18, 19G4-25 Identification and selection of stakeholders 16, 18, 19G4-26 Approach to stakeholder engagement and frequency 15, 16, 17, 18, 20, 56, 58G4-27 Key topics and concerns raised through stakeholder engagement and response 20

Report Profile G4-28 Reporting period 2G4-29 Date of most recent previous report 2G4-30 Reporting cycle 2G4-31 Contact point for questions regarding the report 66G4-32 „In accordance“ option with GRI and Content Index chosen 2, 61G4-33 External verification of the report 2




Governance G4-34 Governance structure, incl. committees of the highest governance body 15, 21, AR (p. 4 ff.)G4-35 Process for delegating authority for economic, environmental and social topics 15G4-36 Executive-level position with responsibility for economic, environmental and social topics 15, 22G4-37 Processes for consultation between stakeholders and the highest governance body 15G4-38 Composition of the highest governance body and its committees 21, AR (p. 95)G4-39 Independence of the Chair of the highest governance body 21, AR (p. 6)G4-40 Nomination and selection processes for the highest governance body and its committees 15G4-41 Process for avoiding conflicts of interest 21G4-42 Highest governance body’s role concerning strategy and goals 21G4-43 Measures taken concerning the highest governance body’s knowledge in sustainability issues 32, 33G4-44 Evaluation of the highest governance body’s performance concerning sustainability http://dghyp.de/remunerationG4-45 Highest governance body’s role concerning sustainability impacts, risks, and opportunities 15, 21G4-46 Highest governance body’s role concerning the effectiveness of the risk management 21, AR (p. 51 ff.)G4-47 Frequency of the highest governance body’s review of sustainability impacts, risks, and opportunities 21, AR (p. 51 ff.)G4-48 Highest committee that formally reviews and approves the sustainability report 15G4-49 Process for communicating critical concerns to the highest governance body 22, 28G4-50 Critical concerns that were communicated to the highest governance body 22G4-51 Remuneration policies for the highest governance body and senior executives 21, 22, 38, AR (p. 96), http://dghyp.de/remunerationG4-52 Process for determining remuneration 21, 22, http://dghyp.de/remunerationG4-53 Stakeholder’s views regarding remuneration 21, 22G4-54 Ratio of the highest annual total compensation to the median annual total compensation http://dghyp.de/remunerationG4-55 Ratio of percentage increase in the highest annual total compensation http://dghyp.de/remuneration

Ethics and Integrity G4-56 Values, principles, standards and norms of behavior 9, 10, 15, 16, 20, 21, 22, 23, 28, 32, 35, http://dghyp.de/codeofconduct 1-10G4-57 Mechanisms for seeking advice on ethical and lawful behavior 10, 23, 26G4-58 Mechanisms for reporting concerns about unethical or unlawful behavior 23

AspectsCategory: Economic Management Approach Economic Performance 12 ff., AR (p. 30 ff.)G4-EC1 Direct economic value created and distributed 12 ff., 38, 41, AR (p. 2, 30 ff., 68 ff.G4-EC2 Financial implications and other risks and opportunities due to climate change 15, 29 7, 8G4-EC3 Coverage of benefit plan obligations 38, 41, AR (p. 69)G4-EC4 Financial assistance received from governance 18

Management Approach Market Presence 38 G4-EC5 Ratios of standard entry level wage compared to local minimum wage 21, 22, 38G4-EC6 Proportion of senior management hired from the local community AR (p. 45)

Management Approach Indirect Economic Impacts 28 ff.G4-EC7 Infrastructure investments and services provided 25, 29G4-EC8 Indirect economic impacts Not reported

Management Approach Procurement Practices 16G4-EC9 Proportion of spending on local communities 16, 51

Category: Environmental Management Approach Materials 43 8 G4-EN1 Materials used by weight and volume 45, 46, 47, 48 8G4-EN2 Percentage of materials used that are recycled input materials 48, 49 8

Management Approach Energy 43, 46 G4-EN3 Energy consumption within the organization 46 8G4-EN4 Energy consumption outside of the organization 46G4-EN5 Energy intensity 46G4-EN6 Reduction of energy consumption 46 8, 9G4-EN7 Reductions in energy requirements of products and services 46 8

UN GlobalCompact




Management Approach Water 43, 47 G4-EN8 Total water withdrawal by source 47G4-EN9 Water resources significantly affected Not reportedG4-EN10 Water recycled and reused Not reported

Management Approach Biodiversity Not applicable G4-EN11 Operational sites in protected areas Not applicableG4-EN12 Impacts on protected areas or areas of high biodiversity value Not applicableG4-EN13 Habitats protected and restored Not reportedG4-EN14 Affected endangered animal and plant species Not reported

Management Approach Emissions 5, 43, 44, 45 8G4-EN15 Direct greenhouse gas (GHG) emissions (Scope 1) 44, 45, 51 8G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2) 44, 45, 51G4-EN17 Other indirect greenhouse gas (GHG) emissions (Scope 3) 45G4-EN18 Greenhouse gas (GHG) emissions intensity 45G4-EN19 Reduction of greenhouse gas (GHG) emissions 5, 43, 45, 49, 51, 59 8, 9G4-EN20 Emissions of ozone-depleting substances Not applicableG4-EN21 NO

X, SOX and other significant air emissions Not applicable

Management Approach Effluents and Waste 43, 49G4-EN22 Total water discharge by quality and destination Not reportedG4-EN23 Total weight of waste by type and disposal method 50 8G4-EN24 Total number and volume of significant spills Not reportedG4-EN25 Handling of hazardous waste 50 8G4-EN26 Water bodies significantly affected by discharges of water and runoff Not applicable

Management Approach Products and Services 5, 43G4-EN27 Mitigation of environmental impacts of products and services 29, 43 7, 9G4-EN28 Reclaimed products and services Not applicable

Management Approach Compliance 43G4-EN29 Fines and sanctions for non-compliance with environmental regulations None

Management Approach Transport 43, 49G4-EN30 Significant environmental impacts of transporting products 49 8

Management Approach Overall Not reportedG4-EN31 Environmental protection expenditures and investments Not reported

Management Approach Supplier Environmental Assessment 16, 51, http://dghyp.de/suppliersG4-EN32 Percentage of new suppliers that were screened using environmental criteria 16, 23, 51, http://dghyp.de/suppliers 8G4-EN33 Significant environmental impacts in the supply chain 51 8

Management Approach Environmental Grievance Mechanisms NoneG4-EN34 Grievances about environmental impacts None

Category: Social Labor Practices and Decent WorkManagement Approach Employment 31 G4-LA1 New employee hires and employee turnover 31, 38, 39, 41G4-LA2 Benefits provided to full-time employees Not reportedG4-LA3 Return to work and retention rates after parental leave 37

Management Approach Labor/Management Relations 17G4-LA4 Minimum notice period(s) regarding operational changes Not reported

Management Approach Occupational Health and Safety 39, 40G4-LA5 Percentage of total workforce represented in health and safety committees 41G4-LA6 Injuries, occupational diseases, lost days, and work-related fatalities 40, 41 1G4-LA7 Workers with high incidence or risk of diseases 39, 40 1G4-LA8 Health and safety topics covered in formal agreements with trade unions Not reported 1

UN GlobalCompact



UN GlobalCompactGRI-Indicator Reference

Management Approach Training and Education 33, 34 1G4-LA9 Average hours of training 33, 34G4-LA10 Programs that support the continued employability of employees 33, 34G4-LA11 Percentage of employees receiving regular performance and career development reviews 33

Management Approach Diversity and Equal Opportunity 35, 36 1, 6G4-LA12 Composition of governance bodies and breakdown of employees by aspects of diversity 36, 41, 57 1, 6

Management Approach Equal Remuneration for Women and Men 31, 38, http://dghyp.de/remuneration 1, 6G4-LA13 Ratio of basic salary and remuneration of women to men 35, 38 1, 6

Management Approach Supplier Assessment for Labor Practices http://dghyp.de/suppliersG4-LA14 Percentage of new suppliers that were screened using labor practices criteria 16, 23, http://dghyp.de/suppliers 1, 6G4-LA15 Significant impacts for labor practices in the supply chain 23

Management Approach Labor Practices Grievance Mechanisms 33G4-LA16 Formal grievances concerning impacts on labor practices None

Human Rights 1 Management Approach Investment 23 1G4-HR1 Significant investment agreements and contracts that include human rights clauses or screening 10, 23, AR (p. 16) 1G4-HR2 Employee training on human right issues 23, 35 1

Management Approach Non-Discrimination 10, 23G4-HR3 Incidents of discrimination and corrective actions taken 23 1, 2

Management Approach Freedom of Association and Collective Bargaining 10 3G4-HR4 Operations and suppliers identified in which the right to exercise freedom of association may be violated or at risk, and measures taken 10 3

Management Approach Child Labor 10, 23 1, 2, 5G4-HR5 Operations and suppliers having significant risk for incidents of child labor, and measures taken 10, 23, http://dghyp/suppliers 1, 2, 5

Management Approach Forced and Compulsory Labor 10, 23 1, 2, 4G4-HR6 Operations and suppliers having significant risk for incidents of forced or compulsory labor, and measures taken 10, 23, http://dghyp/suppliers 1, 2 , 4

Management Approach Security Practices 10 1, 6G4-HR7 Percentage of security personnel trained in the field of human rights 10 1, 6

Management Approach Indigenous Rights Not applicableG4-HR8 Violations involving rights of indigenous peoples and actions taken Not applicable

Management Approach Assessment 10, 23 1-6G4-HR9 Operations that have been subject to human rights review 23 1-6

Management Approach Supplier Human Rights Assessment 23, http://dghyp/suppliers 1-6G4-HR10 Percentage of new suppliers that were screened using human rights overview 16, 23, http://dghyp/suppliers 1-6G4-HR11 Significant human rights impacts on the supply chain 16, 23, 51

Management Approach Human Rights Grievance Mechanisms 23 G4-HR12 Grievances about human rights impacts 23




Society Management Approach Local Communities 53 G4-SO1 Percentage of operations with implemented local community engagement, impact assessments, and development programs 5, 53, 54, 60G4-SO2 Operations with actual and potential negative impacts on local communities 13, 55

Management Approach Anti-Corruption 10, 22 10G4-SO3 Percentage of operations assessed for risks related to corruption and risks identified 10, 22 10G4-SO4 Communication and training on anti-corruption 10, 22, 23, http://dghyp/suppliers 10G4-SO5 Confirmed incidents of corruption and actions taken 20, 21, 22 10

Management Approach Public Policy 18G4-SO6 Total value of political contributions 18

Management Approach Anti-Competitive Behavior 22G4-SO7 Legal Actions for anti-competitive behavior, anti-trust, and monopoly practices 22

Management Approach Compliance 22G4-SO8 Fines and sanctions for non-compliance with laws and regulations 22

Management Approach Supplier Assessment for Impacts on Society http://dghyp/suppliersG4-SO9 Percentage of new suppliers that were screened using criteria for impacts on society 16, 23, http://dghyp.de/suppliersG4-SO10 Negative impacts on society in the supply chain and actions taken None

Management Approach Grievance Mechanisms for Impacts on Society 22, 23G4-SO11 Number of grievances about impacts on society 22, 23

Product Responsibility Management Approach Customer Health and Safety 28 G4-PR1 Percentage of significant product and service categories for which health and safety impacts are assessed Not reportedG4-PR2 Incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services Not reported

Management Approach Product and Service Labeling 28G4-PR3 Principles/procedures for product and service information and labelling 28G4-PR4 Incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling 28G4-PR5 Results of surveys measuring customer satisfaction 28

Management Approach Marketing Communications 28G4-PR6 Sale of banned or disputed products 28G4-PR7 Incidents of non-compliance with regulations and voluntary codes concerning marketing communications 28

Management Approach Customer Privacy 23, 28G4-PR8 Substantiated complaints regarding breaches of customer privacy 23

Managementansatz Compliance 28G4-PR9 Significant fines concerning the provision and use of products and services None

AR = Annual Report 2015

UN GlobalCompact


DG HYP Contacts and Office Addresses

66

DG HYP Regional Office Hanover Berliner Allee 5 30175 Hanover, Germany Phone +49 511 86643808 Fax +49 40 3334-782-3775

DG HYP Regional Office Mannheim Augustaanlage 61 68165 Mannheim, Germany Phone +49 621 728727-20 Fax +49 621 728727-21

DG HYP Regional Office Kassel Rudolf-Schwander-Strasse 1 34117 Kassel, Germany Phone +49 561 602935-23 Fax +49 561 602935-24

DG HYP Regional Office Nuremberg Am Tullnaupark 4 90402 Nuremberg, Germany Phone +49 911 94009816 Fax +49 40 3334782-47 11

DG HYP Regional Office LeipzigSchillerstrasse 304109 Leipzig, Germany Phone +49 341 962822-92 Fax +49 341 962822-93

Regional Offices

DG HYP CONTACTS AND OFFICE ADDRESSES

Institutional Clients

Hamburg Rosenstrasse 2 20095 Hamburg, Germany Phone +49 40 33 34-21 59 Fax +49 40 33 34-12 60

Management Board Chairman ofDr Georg Reutter (Chairman) Supervisory BoardManfred Salber Frank Westhoff

Deutsche Genossenschafts-Hypothekenbank AG Rosenstrasse 220095 Hamburg, Germany

PO Box 10 14 46 20009 Hamburg, Germany Phone +49 40 33 34-0 Fax +49 40 33 34-11 11 Internet: www.dghyp.de

DG HYP Real Estate Centre Berlin Pariser Platz 3 10117 Berlin, Germany Phone +49 30 3 19 93-51 01 Fax +49 30 3 19 93-50 36

DG HYP Real Estate Centre Hamburg Rosenstrasse 2 20095 Hamburg, Germany Phone +49 40 33 34-37 78 Fax +49 40 33 34-11 02

DG HYP Real Estate Centre Dusseldorf Steinstrasse 13 40212 Dusseldorf, Germany Phone +49 211 22 04 99-10 Fax +49 211 22 04 99-40

DG HYP Real Estate Centre Munich Türkenstrasse 16 80333 Munich, Germany Phone +49 89 51 26 76-10 Fax +49 89 51 26 76-30

DG HYP Real Estate Centre Frankfurt CITY-HAUS 1, Platz der Republik 6 60325 Frankfurt/Main, Germany Phone +49 69 75 06 76-21 Fax +49 69 75 06 76-99

DG HYP Real Estate Centre Stuttgart Heilbronner Strasse 41 70191 Stuttgart, Germany Phone +49 711 12 09 38-0 Fax +49 711 12 09 38-30

Real Estate Centres


This report was prepared by: DG HYP Sales Coordination and Investor Relations E-mail: ir(at)dghyp.de

DG HYPDeutsche Genossenschafts-Hypothekenbank AG

Rosenstrasse 2 | 20095 HamburgPhone: +49 40 3334-0 l Fax: +49 40 3334-1111

www.dghyp.de

Documents

SUSTAINABILITY REPORT 2015 - DZ HYP