Key Performance Indicators (draft 1)

E2 Management Consulting Ltd.

Wehntalerstr. 3, CH-8057 Zürich, Tel. +41 1 362 85 72, Fax +41 1 361 86 01 www.e2mc.com, [email protected]

Stakeholder Information December:

Key Performance Indicators (draft 1)

Oliver Schmid-Schoenbein / Dr. Arthur Braunschweig / Gaby Oetterli

Zürich, December 18th 2001

The SPI-Finance 2001 project enters into its 2

_{stakeholder consultation phase. Since the 1}

_{round of stakeholder meetings in August}

2001 the participating financial institutions have developed this first draft of key performance indicators (KPI). The criteria when

selecting these indicators were:

• social relevance of an issue

• expectations of stakeholders

• feasibility of data collection

• the goal to limit the number of key performance indicators to a feasible number

This document contains draft 1 of the KPIs including comments and provisional defintions. This draft 1 of KPIs represents from the

perspective of the SPI participants the best solution when applying these criteria. However the project is still open to changes in this

selection which in particular may arise from stakeholder feedback, as well as from comparison to international standards or regulations

and from verification of the KPIs within the financial institutions.

Stakeholders are now invited to provide feedback to this first draft of indicators. In order to facilitate the feedback process, please

download the feedback form named SPI Stakeholder Comments Draft KPIs.doc (Word-Document) from the website

www.spifinance.com

Please provide your feedback to our contact person Gaby Oetterli. She can be reached by email at [email protected], by phone at

++41 - 1 - 362 85 72 or by fax at ++41 - 1 - 361 86 01. We would appreciate recieving your feedback not later than January 14th,

2002. Feedback that reaches us later than January 31st, 2002 cannot be considered.

Contents

CSR Management

page 3

Anti-Money-Laundering

page 6

Internal Social Performance

page 4

Retail Banking

page 6

Performance to Society

page 5

Investment Banking

page 7

Suppliers

page 5

Asset Management

page 7

SPI

-Finance

2001

Draft KPIs Dec 2001

SPI-Finance Indicator Overview (draft 1)

Key

K = Key Performance Indicator - Quantitative

Q = Key Performance Indicator - Qualitative

A = additional indicator, which is important for measuring performance, but does not qualify for an overall KPI due to local, regional or legal context

Unit Text # re- cor-ded non-compl. Text CSR Policy CSR Organisation CSR Compliance Stakeholder Dialogue # audits; hours; empl. CSR Audits

CSR Policy as an expression of an organisations' core social values. It may consist of one or more documents, including CSR policies for separate business sectors (e.g. human resources, suppliers, lending policy, investment policy etc.).

Non-compliance to laws, regulatory and voluntary codes of conduct (e.g. advertising code). To be counted e.g.: referrals to the ombudsman, reports to an advertising standards authority where the complaint was upheld, law cases having resulted in court action.

Description of stakeholder involvement procedures.

Includes both internal and external audits on compliance with CSR policy, procedures and data.

Provisional Definition and Comments Indicator Quality of Manage-ment System Comp-liance Issue

CSR Management

A qualitative description of the organisation explaining the installed procedures. K Q x A x x x x No. CSR 1 CSR 2 CSR 4 CSR 5 CSR 3 Partici-pation Text

Unit Text % $ % % Internal CSR Policy Employee Fluctuation

Salary & Social Security Benefits Sustainability orien-ted bonus incentives

Employee profile survey results (%, scale) Employee Satisfaction Survey

Is there a CSR policy in place? May contain anti-harassment policy, freedom of association (incl. unions), part-time employment / job sharing, layoff policy incl. out-placement support, anonymous feedback facility.

Includes bonuses, etc.; total and average per full-time equivalent.

Bonuses based on long term successes and/or achieving social performance crite-ria. To be reported only where bonuses make up for a material part of remuneration.

Employee profile on gender, ethnicity, disability, age, etc. per hierarchy level by country. Some globally active companies might not publish, for fear of legal problems (esp. in US).

Survey results covering employee satisfaction with job security, remuneration & be-nefits, work/life-balance, training & development, company's communication culture, company's social performance.

Provisional Definition and Comments Indicator CSR Manage-ment Employ-ment and Social Protec-tion Fair Compen-sation Issue ratio Female-Male Salary Relation

Ratio of female to male salaries including bonus, etc. per hierarchy level. Some globally active companies might not publish, for fear of legal problems (esp. in US).

Internal Social Performance

% changes in a given year. Not to be included are pension leaves and deaths. K x Q x A x x x x x No. Int 1 Int 2 Int 4 Int 5 Int 7 Int 3 Int 6 Key K, Q, A: see p. 4 Equal Oppor-tunity

SPI

-Finance

2001

Draft KPIs Dec 2001

SPI-Finance Indicator Overview (draft 1)

Key K, Q, A: see p. 4 Unit $ $ Aggregated contributions

Total and split of value added to stakeholders

Provision of contribution data according to the London Benchmarking Guidelines. Provisional Definition and Comments

Indicator Contribu-tions Value Added Issue

Performance to Society

Value added expresses the economic value created by a company's activities. It is the company's contribution to the GNP.

K x Q A x No. Soc 1 Soc 2 Unit Text Text Social performance screening of suppliers Supplier satisfaction survey

Report on policy and procedures to screen suppliers' social performance (esp. top suppliers).

Provisional Definition and Comments Indicator Perfor-mance of Suppliers Perform. towards Suppliers Issue

Suppliers

Sup 2 Supplier satisfaction with e.g. prompt payment, prices and treatment. Report on supplier satisfaction survey, where available also quantitatively.

Key K, Q, A: see p. 4 Unit Text $ and % Lending Policy Lending Profile $ and % Lending with high

social benefit

The social criteria applied in lending as defined by each financial institution.

Provision of tailored and innovative products and services applying special ethical / sustainability criteria, incl. provision of finance to deprived communities.

Provisional Definition and Comments Indicator Policy Customer Profile Issue

Retail Banking

Repartition of lending business, including industrial sectors and company sizes (mentioning SME-part of lending).

K Q x A x x No. RB 1 RB 2 RB 3 Fostering Social Capital Unit Amount of training Number of reports Amount of training Reports to authorities Text Comparison of AML-Systems

Training activities are legally required in some countries anyway.

Qualitative reporting of the system in place (e.g. the Swiss Federal Banking Commission EBK/SFBC report on the Abacha-case).

Provisional Definition and Comments Indicator Training Comp-liance Issue

Anti-Money-Laundering

The number of reports is available to every financial institution. Yet the exact defini-tion still has to be defined. Financial institudefini-tions are still considering whether 'reports to authorities' or 'reports leading to prosecution ' is more appropriate.

K x Q A x x No. AML 1 AML 2 AML 3 Manage-ment

SPI

-Finance

2001

Draft KPIs Dec 2001

SPI-Finance Indicator Overview (draft 1)

Key K, Q, A: see p. 4 Unit Text Asset Management Policy $ and % Assets under Management with high Social Benefit

Report on existence of policy and its social performance contents. Include e.g. responsible marketing / "best advice”.

Provision of tailored and innovative products and services applying special positive ethical / sustainability criteria. Includes investments in developing countries.

Provisional Definition and Comments Indicator Policy Issue

Asset Management

May include SRI oriented communication with board, SRI oriented motions or votes at shareholder meetings, etc.

x AM 3 Unit Text $ and % Investment Policy Customer profiles: global transaction structure $ and % Transactions with

high social benefit

Social criteria applied, incl. (a) developing countries credit & debt issues; (b) human rights policy in (co-) financing projects, (c) Corporate Governance control.

Provision of tailored and innovative products and services applying special ethical / sustainability criteria. High social benefit can also mean to prove not to have a major „social performance deficit“.

Provisional Definition and Comments Indicator Policy Customer Profile Issue

Investment Banking

According to World Bank classification of economies (4 groups of per-capita GNP). K Q x A x x No. IB 1 IB 2 IB 3 Fostering Social Capital

$ and % Insurances with high

social benefit

Provision of tailored and innovative products and services applying special ethical / sustainability criteria. (Insurance basically offers social benefit. "High" benefit might be (a) giving basic cover which (b) is not yet offered by the market at large).

Fostering Social Capital x Ins 6 Unit Text #, $ and % Socially relevant elements of underwriting policy Customer profile $ and % Equity of access to insurance in low-income areas

Reporting may include socially relevant policy elements , e.g. responsible marketing, medical screening, genetic testing, transparent commissioning. Reporting may include how policy application is ensured.

Insurance given to people and SMEs in deprived areas (to be defined per area). Provisional Definition and Comments

Indicator Policy Customer and Company Profile Issue

Insurance

# of customers (private, business), age profile (private), male/female profile (private, possibly business), ethnicity split (private, possibly business), business size profile (for companies), geographical split.

K Q x A x x No. Ins 1 Ins 2* Ins 4 Equity of Access $ and %

Risks profile Types of risks covered; contract sizes. Basic information (even if not necessarily a socially relevant KPI in itself).

x Ins 3

#

Customer complaints x Info on complaints "qualities" (e.g. pricing, settling, exclusion). Ins

5*

Keys: K, Q, A: see p. 4 * = indicator does not apply for re-insurance